Oatly Aktie

Board of Directors. I really want to welcome you to the 2026 Annual General Meeting of Oatly Group AB, and I hereby declare the general meeting open. Before we move on, I would like to introduce the people with me on the podium. With me, I've got to my left, Jean-Christophe Flatin, the CEO of Oatly.

Thank you.

Seated at the podium also are Shoan Panahi and Greta Ekblom. Thank you for joining us from our legal adviser White & Case, who've got huge experience in handling general meetings in public companies. Present at the general meeting as well is our certified public accountant, Fredrik Norrman.

Prior to the general meeting, it's been possible for shareholders to vote by submitting a postal vote. We note with great pleasure that 264 shareholders representing about 50% of the vote in Oatly have used this opportunity, and I want to thank them for it. Anyone who wishes to speak is asked to state their name first and preferably the number of shares they represent. I would also appreciate if you could turn off your cell phone.

If you allow me now, let us proceed to agenda item #2. We want to elect the Chairperson of the AGM. As you're all aware, it's been possible to vote in advance by submitting a postal vote, and we therefore know the outcome of the first resolution item already. Oatly's Nominating, Corporate Governance and Sustainability Committee has proposed that Shoan Panahi from White & Case, here to my right, is elected Chairperson of the AGM. The proposal has been approved by more than 99% of the votes. So with that result, I will hand it over to you, Shoan.

Thank you, Eric. Though I wonder who that person...

The minutes will be taken by me and will eventually be published on Oatly's website. I would like to inform you that it may contain personal data relating to shareholders who make contributions here at the meeting today. I would also like to inform you that today's meeting will be broadcasted over web link in accordance with the Board of Directors suggestion.

The meeting will be held in English in order for Oatly's international shareholders to be able to follow the meeting over the web. I would also like to inform you that all of the shareholders who are entitled to cast their vote already have cast their votes by postal votes. Therefore, we will not ask the meeting if the proposals may be approved here. And instead, we will state which proposals that have been approved by the required majority. Greta, could you explain how the voting list is drawn up?

Yes. So anyone who wishes to attend the AGM must be recorded in the share register maintained by Oatly Sweden AB as of 11th May 2026 and must have given notice to the company no later than the date specified in the notice of the meeting. A list of shareholders who have registered to attend the meeting, including those who have chosen to vote by post has been distributed and the shareholders who are here today have been ticked off at the entrance.

Based on the postal votes received, we can confirm that agenda item #3 has been approved by the required majority. I find that the list will constitute the voting list at the meeting. Item #4, approval of the agenda. The proposed agenda is included in the notice and the materials distributed here today. And based on the postal votes, we can confirm that agenda item #4 has been approved by the required majority.

Election of person to verify the minutes. The meeting shall elect a person to verify the minutes. The Board of Directors proposes that Greta shall verify the minutes in addition to myself. The assignment to verify the minutes also includes verifying the voting list and that the received postal votes are correctly reflected in the minutes of the meeting. Based on the postal votes received, we can confirm that agenda item #5 has been approved by the required majority.

Item #6, determination as to whether the AGM has been duly convened. Oatly has convened this meeting by publishing the notice on Oatly's website and in the official Swedish Gazette, Dagens Industri on 10th of April 2026. Based on the postal votes received, we can confirm that agenda item #6 has been approved by the required majority.

Item #7, submission of the annual report and auditor's report and the consolidated annual report and auditor's report for the group. The annual report and the auditor's report as well as the consolidated annual report and auditor's report for the group have been available on our Oatly's website, Oatly's head office since 29th of April 2026. The documents have also been sent to the shareholders who have requested it. Hereby, I give the floor to Fredrik Norrman, Oatly's certified public accountant, who will present the auditor's report.

Testing. Can you hear me?

Perfect.

Mr. Chairman, shareholders, my name is Fredrik Norrman. I have been granted the opportunity, the responsibility, of course, as well, to be the main responsible for the audit of Oatly AB. The elected audit company is Ernst & Young. Ernst & Young was elected already back in 2019 as the first year and 2025 has been my first year as the main responsible.

And just a little bit of information about myself. I've had this role as audit -- I've been working for EY for 23 years now, time flies. My main responsibilities during these 23 years has been manufacturing companies in a listed environment, both in the U.S. and in Sweden. And what's the purpose and the scope of the audit then? Yes.

So the audit standards require us to be -- to plan and perform the audit in accordance with standards and express an opinion about the reasonable assurance whether the financial statements are free of material misstatements, whether due to fraud or error. The audit is also, of course, designed considering the organization of Oatly AB and covers a large part of the assets, liabilities and revenue and expense.

And the conclusions, we confirm to the AGM that we are independent with respect to the company and in accordance with professional standards. We also confirm that the consolidated financial statements present fairly in all material aspects, the financial position of the company as at December 31, 2025, and the results of its operations and its cash flow for the year then ended is in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Hence, I recommend the AGM to do three things: approve the financial statements, including the balance sheet and income statement; two, to approve the allocation of profit based on the Board's proposal and also grant the discharge of responsibilities for the Board and the CEO.

Thank you, Fredrik. Based on the postal votes received, we can confirm that this agenda item has been approved by the required majority and that the meeting approves that the accounting documents and the auditor reports for the financial year 2025 have been submitted. Now I give the floor to Jean-Christophe Flatin, Oatly's CEO.

Thanks a lot, Shoan. Hello, everyone. Thank you for your presence for you here physically present, and thank you for your attention and interest for those watching us remotely. So it's my pleasure to give you a business update, the state of the union as our American friends would say. And we start with a few important legal disclaimer that I put in front of you and I move to the next one.

Here are the few key messages I want you to take away from the status of the business today. As you can remember, we have run a deep transformation of this business over the last three years. And as an outcome of that, I'm convinced we now have a much healthier, stronger business with clear strategies, clear accountability, stronger margins and definitely a significantly improved profitability.

That progress, I'm happy to report, has continued in the quarter 1 of 2026 we reported to the public market just a few weeks ago. And as we look ahead, we remain confident that by continuing to executing our mission and executing the strategies we have chosen, that will enable us to create strong long-term shareholder value. Let's have a quick look at the recap of where do we come from.

I talked about the 3 years transformation, and I think some figures are important to illustrate that journey. If we compare to the year 2022 that you see on the left-hand side of the chart, our revenue grew by 19% or $140 million to an all-time high of $862 million at the end of 2025. Our adjusted EBITDA has improved by $275 million over that same period of time. And our free cash flow equally improved by an amount of $436 million over the same period of time.

These figures are illustrating that we are clearly making good, healthy progress as we drive profitable growth. Let's zoom in on our quarter 1 2026 scorecard, which is the most recent results we shared publicly. Our revenue grew by 15.6% or 8.1% when we look at it in constant currency. Our gross margin has now reached 33.4%, which represents an improvement of 188 basis points as compared to last year, while our adjusted EBITDA reaches positive $5 million, which represents 2.2% of our net sales and an improvement of $8.7 million versus last year.

This combined improved performance, both on top line and bottom line, confirm that we remain totally focused on driving growth and impact in a disciplined and profitable manner. And we believe simply this is the winning recipe for our company. Finally, our cash flow in the quarter was a negative $11.7 million, which is an $8.8 million improvement versus last year.

It's important that I confirm our business plan remains fully funded and bringing the company to structurally positive free cash flow is very important to us. We fully intend to drive the business to that milestone, not just from improvement from the P&L, but by pulling all available levers to us, including working capital.

Let's look at why we are doing that. I know these are also figures, but they are rooted in our mission. To be clear, we have driven these improvements to enable our mission in helping people live healthier life without recklessly taxing the planet and the planet resources. As we continue to improve our business and the financial results, it is extremely important to us that we don't lose sight of why this company exists.

Our mission is a very important part of our culture, and I believe it makes Oatly truly unique. We have maintained our mission and purpose throughout this transformation, and we remain fully committed to it going forward. This slide shows how we measure our progress on the mission. The primary metric we look at is the CO2 savings of making the switch from Cow's dairy to Oatly since that switch is critical to the planet.

So on the left-hand side, on the pink graph, you will see that in the past 6 years, we estimate that we have enabled consumers to avoid drinking over 1.6 billion liters of cow's milk by choosing our products instead. This translates on the right-hand side of the chart, over 1.4 billion tonnes of greenhouse gas avoided as our consumers switched from cow's milk to Oatly product. This was estimated using a methodology developed with Quantis.

I encourage you to read more about this and all the sustainability efforts we are making in our full sustainability report, which is available on our Investor Relations website. I am very proud of this progress. We have plenty of work to do to achieve our long-term goals, but clearly, we are on our way for having an impact. As we look forward, I'm equally proud to say that our mission will remain the same.

We exist to help people live healthier life without recklessly taxing the planet resources, and we want to contribute to change the food system for the better. The mission works hand-in-hand with our strategy for shareholder value creation. Just in retail stores around the world, the dairy market is estimated to be nearly $600 billion of value. And the food service market, which is not measured in this figure, add a significant amount to this.

So total plant-based is a small fraction of the overall dairy market, which means that there is plenty of room to grow from here. As we execute our strategy of converting consumers to our oat-based products, we expect to see a significant margin expansion and profit improvement. And we expect that profit improvement to translate into strong, sustainable long-term shareholder value creation. So I thank you for listening, and I give back the floor to Shoan.

Thank you. Fantastic. Let's proceed to agenda item #8, resolution regarding adoption of the income statement and balance sheet and the consolidated income statement and the consolidated balance sheet for the financial year 2025. Oatly's auditor recommends that the AGM adopts the profit and loss account and the balance sheet as well as the consolidated profit and loss account and the consolidated balance sheet included in the annual report for 2025.

And based on the postal votes received, we can confirm that agenda item #8 has been approved by the required majority and that the meeting resolves to adopt the profit and loss account and the balance sheet as well as the consolidated profit and loss account and the consolidated balance sheet included in the annual report 2025.

Let's move on to the resolution regarding the allocation of the company's profit or loss in accordance with the adopted balance sheet. The Board of Directors proposes that no dividend is distributed for the financial year 2025 and the company's results for the financial year 2025 is carried forward. And based on the postal votes received, we can confirm that agenda item #9 has been approved by the required majority and the meeting approves the Board of Directors' proposal.

Item #10, resolution regarding discharge from liability of the members of the Board of Directors and the CEO. Oatly's auditor recommended that the AGM resolves to grant the members of the Board of Directors and the CEO discharge from liability for the financial year 2025. Based on the postal votes received, we can confirm that agenda Item #10 has been approved by the required majority and that the meeting approves the grant of discharge from liability. We also note that the members of the Board as well as the CEO did not partake in the decision regarding their own discharge from liability.

Item #11, determination of the number of members of the Board of Directors. Oatly's Nominating, Corporate Governance and Sustainability Committee proposes that the number of the members of the Board of Directors elected by the general meeting in accordance with Oatly's Articles of Association shall be 10 without deputy members. And based on the postal votes received, we can confirm that agenda Item 11 has been approved by the required majority and that the meeting resolves in accordance with the Nominating, Corporate Governance and Sustainability Committee's proposal.

Now we come to Item #12, election of Members and Chairperson of the Board of Directors. Oatly's Nominating, Corporate Governance and Sustainability Committee proposes that Eric Melloul is reelected as ordinary member of the Board of Directors until the close of the Annual General Meeting 2029. It also proposes that Stefan Descheemaeker is elected as new ordinary member of the Board for the period until the close of the Annual General Meeting 2029.

And lastly, it proposes that Martin Brok is elected as Chairperson of the Board for the period until the close of the Annual General Meeting 2029. And based on the votes received, we can confirm that this item has been approved by the required majority and the meeting resolves in according with the Nominating, Corporate Governance and Sustainability Committee's proposal. Eric, would you like to say something to Martin when passing on, on the Chairperson role?

Welcome, Martin. No, first of all, I want to say how much I've been proud really to lead the Board of Oatly for the last almost 10 years. It's been an incredible ride, and I've been really honored to be able to support the management team, specifically in the last 3 to 4 years in delivering what's been an outstanding change and turnaround plan and preparing for what's going to be, obviously, a very promising 5 to 10 years. So thank you for having me.

Thank you for having me. And then I want to welcome Martin. Martin is an exceptional person. He brings with him lots of experience in consumer branding companies around the world, whether it's Nike or Starbucks or many others. He's got an incredible style. He will, I'm sure, continue to challenge and support the management team as Chairman of the Board. And he can count on my time and contribution to make it happen. So welcome, Martin.

And in the name of the management, we would like to thank Eric for his stewardship of the Board and his partnership with us over the last 4 years. Thank you, Eric.

Thank you. Let's move on to the formal pieces of the meeting. So now we have come to agenda item #13, determination of the remuneration to the members of the Board of Directors. Oatly's Remuneration Committee proposes that compensation shall be allocated to the directors in accordance with the committee's proposal included in the agenda Item #13 in the notice to the AGM.

And based on the postal votes received, we can confirm that agenda item 13 has been approved by the required majority and that the meeting resolves in accordance with the Remuneration Committee's proposal. Item #14, fees payable to the auditor. Oatly's Audit Committee proposes that the auditor fees paid in accordance with the approved invoices. And based on the postal votes received, we can confirm that agenda item 14 has been approved by the required majority and the meeting resolves in accordance with the Audit Committee's proposal.

Item #15, election of the auditor. Oatly's Audit Committee proposes that the registered auditing company, Ernst & Young Aktiebolag is reelected as auditor for the period until the close of the AGM for the financial year 2026. Based on the postal votes received, we can confirm that agenda Item #15 has been approved by the required majority and the meeting resolves in accordance with the Audit Committee's proposal.

Now we come to two technical items. The first one is Item #16, resolution regarding implementation of LTIP 2026 to 2028 incentive program and increase in the overall share limit and issuance of warrants of Series 2026 and approval of transfer of 2026 warrant instruments.

The Board of Directors of Oatly proposes that the AGM resolves to implement a new long-term incentive program, LTIP 2026 and 2028. For Oatly's executive management, top key personnel selected senior key personnel and to increase the overall share limit under Oatly's incentive plan. The proposal also includes the issuance of up to 67,263,960 new warrants of Series 2026 and approval of transfer of 2026 warrant instruments to secure delivery and settlement of awards under this LTIP.

For the avoidance of doubt, the terms and conditions of LTIP 2021 to 2026 shall not be amended through this proposal and will remain in force.

Hello, and welcome to Oatly's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that today's call is being recorded, and I'll be standing by. It is now my pleasure to turn the meeting over to Blake Mueller. Please go ahead, sir.

Good morning, and thank you for joining us today. On today's call are our Chief Executive Officer, Jean-Christophe Flatin; our Global President and Chief Operating Officer, Daniel Ordoñez; and our Chief Financial Officer, Marie-Jose David.

Please review the cautionary statement regarding forward looking statements and other disclaimers on Slide 3, which are integrated into this presentation and includes the Q&A that follows. Please refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.

Also, on today's call, management will refer to certain non IFRS financial measures, including adjusted EBITDA, constant currency revenue and free cash flow. Please refer to today's release for a reconciliation of non IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, Oatly has posted a supplemental presentation on its website for reference.

I'd now like to turn the call over to Jean-Christophe.

Thank you, Blake, and good morning, everyone.

Slide 5 are the key messages I want you to take away. First, we have delivered a solid performance in quarter 1, both on top line and bottom line. This continues to build our confidence in our journey to accelerate profitable growth.

Second, we continue to see clear signs that our growth playbook is working. It's already driving real impact in Europe and International as well as increasingly so in North America. We are, therefore, focusing on executing against this playbook more broadly in order to continue to drive further incremental demand.

And finally, we are reaffirming our 2026 guidance in a context where the impact of the conflict in the Middle East is already visible in our costs from March onwards and brings further uncertainty for the rest of the year.

Turning to Slide 6. Here, you can see our solid quarter 1 scorecard on our most important KPIs. Our revenue grew by 15.6% and 8.1% in constant currency. Our gross margin reached 33.4%, which represents an improvement of 188 basis points as compared to last year, while our adjusted EBITDA reached positive $5 million, which represents 2.2% of our net sales and an improvement of $8.7 million versus last year.

This combined improved performance on top line and bottom line confirms that we remain focused on driving growth and impact in a disciplined and profitable way. We believe that this is a winning recipe for our company.

Finally, our free cash flow in the quarter was a negative $11.7 million, which is an $8.8 million improvement versus last year. Our business plan remains fully funded and bringing the company to structurally positive free cash flow is important to us. We fully intend to drive the business to that milestone, not just from improvements in the P&L, but also from putting on all available levers, including working capital.

Slide 7 confirms our focus areas for 2026. As Daniel will outline, we are seeing very positive traction on our refreshed growth playbook, and we will be doubling down on its execution.

While we do not have a detailed update for you today, in 2026, we plan on completing the strategic review of the Greater China segment. We continue to evaluate a range of options, including a potential carve out with the goal of accelerating growth and maximizing the value of the business. We will update the market on our progress as necessary.

Finally, we are navigating the context of uncertainty and volatility created by the conflict in the Middle East with a clear objective to minimize as much as possible its impact on our performance. We are permanently adapting our end to end supply chain choices to ensure we could serve consumers and customers.

When it comes to the global cost impact, they are so far mostly fuel prices related, either directly in logistics or indirectly like in packaging. We are mobilizing our culture of efficiency and frugality in order to mitigate those and continue to adapt with agility to this pretty unpredictable context.

In this context, Slide 8 reaffirms our guidance. In 2026, we expect the continued rollout of our refreshed growth playbook to drive an acceleration in our profitable growth. Specifically, we expect to drive constant currency revenue growth of 3% to 5%. And with what we know today about our ability to mitigate the cost impact of the Middle East conflict, we expect to deliver adjusted EBITDA towards the low end of the range of $25 million to $35 million.

With that, Daniel, over to you.

Thank you, JC, and good morning, everyone.

I will start my discussion on Slide 10. Over the past 2 years, we have methodically deployed this new playbook with the objective to attack barriers to consumption, drive relevance and increase availability. We are confident it is working, as we see continued positive results in Europe and increasingly so in North America, as we will discuss today.

Staying true to what makes Oatly, this playbook change is founded on the strategic choice to be relevant to a much broader population, a decision not just to aim at growing consumption within our historical consumer base, the lactose intolerant and the environmentally conscious, but to also expand our target market to the upcoming younger generations to drive true incremental consumption growth.

That means we're focusing on our strength within beverages. This is taste and health instead of trying to mimic dairy in all its forms. In this exciting space, the room for penetration growth is enormous, and it is precisely where our strengths and assets are rooted.

As you heard us say, an alternative to dairy no more, but an experience canvas for the beverages market, working with customers to renovate their menus and shelves to be more relevant, more provocative and more on trend with today's consumer.

Taste & Health defined a clear high ground for the new generations, in particular for this category, but we have also adapted how we communicate to them. They are digital natives, and we have migrated from analog heavy individual advertising to a more relevant, integrated and digital first approach, always blended with iconic culture making life events. So as we say we're doubling down on the playbook, let me show you some examples of what we mean by that and in which specific areas we do invest.

On Slide 11, you see how we're doubling down on our taste leadership in beverages. Our iconic Barista product remains our top selling item and continues to grow very fast. And the flavored Baristas such as the caramel, vanilla and popcorn flavors keep showing healthy growing velocities, proven to be a hit with consumers.

As anticipated last time, we have launched in the last few days additional flavors in selected markets such as churros or coconut, and we're expanding the matcha range with the addition of a strawberry flavor, which is the most popular combination in foodservice. This will enable customers to create an even wider range of drinks.

I am particularly excited to say that our Cold Foam Barista has already reached the menu of many of our top customers. It can be added on top of any beverage, hot or cold. Plant based cold foam options weren't widely available in the market thus far. So this is a breakthrough product that delights consumers and elevates the experience for our foodservice customers.

See, taste is a new platform for Oatly and for the category. This is not just random innovation.

Slide 12 shows the foundation of our unique and differentiated model. We have over 60 beverage market developers around the world who spend over 1,500 hours a week with our out of home customers, deploying our lookbooks and designing recipes to make our customer menus more on trend and therefore, more relevant to their customers.

We are doubling down. We continue to steadily increase coverage across this space, considering every different customer type and adapting our route to market accordingly. As you can see on this slide, I am particularly proud to see how we are sophisticating our service package to be relevant on and offline and deploying a tailored neighborhood attack approach with our already famous Oatly Week concept, like you see in the Barcelona example here.

Finally, I am very excited to see how this is working in the U.S., having experienced it myself in the streets of Brooklyn and the Lower East Side in Manhattan or Venice and the Arts District in L.A.

Slide 13 shows you selected examples of the types of outdoor communications we do, in this case, in the streets of Warsaw in Poland, so Oatly, but the new Oatly in its essence.

Slide 14 shows you another example of the sort of culture creating experiences we do. In this case, a collaboration with AVAVAV, one of the most talked about indie fashion brands at the Fashion Week Milan some weeks ago. While guests and models could enjoy Oatly signature drinks live, the social media impact of this collaboration spread across Europe and North America at the very same time as a true global event.

On Slide 15, you can see the latest and greatest of our social media presence, where most of our brand investment is being deployed, both with brand generated but also user generated content by our brand ambassadors.

Finally, on Slide 16, we demonstrate how the new strategy is helping us to make shelves more exciting and relevant, occupying more space than before, but not only for Oatly, but also for the category as customers start sensing a new momentum.

I am particularly excited to see the first in store executions of the new strategy in Canada. Our team there are doing a phenomenal job anticipating what we're capable of doing in North America.

When we look at the growth trajectory on Slide 17, we see accelerating growth, which gives us additional confidence that the strategy is working. Europe and International keeps on strengthening with another quarter at 14.5% growth in constant currency. That's a stellar performance and a very healthy mix of growth in both the established and in the new markets.

I am very pleased to say that at the back of strong performance across all channels, the North America segment has seen growth in the quarter of 12.3%, excluding the segment's largest foodservice customer, or 3.8% total net growth when you click through to Slide 18. So step by step, we're bringing this segment into its growth path following the European model footsteps.

As we said, we expect it will take longer than in Europe because of the time lag in retail, but we are mildly optimistic that we're reaching a tipping point in this segment.Moving forward, we will continue to focus on the controllables and the deployment of the growth playbook.

Slide 19 shows that we continue to consistently outperform our competition in the tracked channel data, more than ever before. We continue to expand our retail market share in every single European market that we measure, whether it is an established or an expansion market.

And in the U.S., as we continue to lap last year's portfolio delistings, our drinks portfolio consolidated the growth trajectory we started in the fourth quarter at the back of sustained strong velocities and strong distribution gains in the core portfolio, showing record highest TDPs and ACV.

Slide 20 shows that when we look at the European markets in aggregate, since the implementation of the new playbook last year, oats keeps gaining momentum, showing its decisive role in driving the overall category upwards despite most other crops that continue to lose traction.

Slide 21 shows 2 important dynamics that prove the core objective of the new strategy, generate incremental consumption from new younger consumers. First, switching analysis in the core European market shows the ability of the new portfolio to drive incremental sales. Second, as we dig into the data, we see that consumers that are coming into the category via the new portfolio tend to be younger consumers, which we find very encouraging.

As we move into Slide 22, many of you might be thinking how fast can we replicate this in the U.S. Well, first things first, controlling the controllables, we have progressively taken this segment into positive growth and profit.

Out of home continues to grow steadily, 12.4% growth outside the largest customer and at the back of the identical model we've implemented in Europe, enamoring the new coffee and beverages space with Oatly's Magic.

Having signed a partnership with Onyx, recently named one of the most notable coffee specialty brands in the world, is a concrete sign of what's happening in the U.S. Excluding that large customer, this channel represents over 25% of this segment, and we expect it to continue to grow by increasing coverage and by driving more customer diversification.

In retail, our core beverages portfolio now represents over 95% of the channel's revenue. We continue to gain strong distribution points within this portfolio, taking the measured retail channel to 10.5% growth in the quarter and to the record highest market share, breaking the 30% for the first time.

To this, we should add the 150% growth in clubs with opportunities to continue to expand velocities and regions. So the outlook is good.

So while category softness in the measured retail channel continues, we expect that will start changing the moment we are able to list the new portfolio. And I'm happy to say that early customer conversations for the upcoming reviews seem promising.

Now that we have discussed the past, I want to give you a preview of our future plans, as you see on Slide 23. And this is simply a confirmation of the last discussion. You should not expect any significant change, but a relentless consolidation of the new playbook execution.

First, we will be decisively leveraging our fiber credentials by campaigning about the fiber content of our product. Many global health authorities estimate that people have a fiber deficiency of about 10 grams per day. As a company that is rooted in science, our visionary founders have historically advocated for the benefits of fiber in people's diets. So what you see here is just the first step, and you should expect to see more from us in the near future.

Second, step by step, we are working to accelerate the introduction of the new portfolio in the U.S. retail during the upcoming range reviews. While we expect the new listings to start taking place at the back of this year, we also expect that the full rollout will move well into next year.

On Slide 24, I will refer to the progress we're making in China. Consistent with previous discussions, the general context and the price pressure in the foodservice business continues. At the same time, I am pleased to report that the strong development of the retail channel accelerated, doubling in quarter 1 year on year and representing already close to 1/3 of the segment's revenue.

Finally, as JC mentioned, we intend to complete the strategic review during this year.

To finish this business update, I would like us to step back and pay attention to the trajectory of the key business metrics of the year since JC and I joined the business, taking quarter 1 as a reference to make the comparison like for like with today's results disclosure.

Here, you can see how the growth evolution is yielding a direct positive effect in cost absorption and muscle building margin. This has allowed us to continue to reinvest in growth while steadily reducing SG&A, and in so doing, building a more resilient business able to better navigate one off effects like the volatile context we described during the introduction.

Way further to go, but we're confident we're making significant decisive steps in the right direction.

With that, I will now turn the call over to Marie-Jose, MJ?

Thank you, Daniel, and good morning, everyone.

Slide 27 highlights our ability to execute globally with continued strength in the European and International segment and increasingly so in North America. As an illustration, this quarter marked our first period of positive volume growth in North America since Q4 2024, an encouraging signal our growth playbook is working.

In Q1, we grew revenue 15.6% and 8.1% on a constant currency basis. Gross margin was 33.4%, which is an increase of 188 basis points compared to last year's Q1. This was a result of efficiencies across the organization, including facility optimization, volume absorption and ongoing productivity improvements, in addition to a strong mix in Europe and International.

Adjusted EBITDA was a positive $5 million in the quarter, which is $8.7 million higher than last year's Q1. The significant increase in adjusted EBITDA was a result of strong top line growth and gross margin expansion.

I will now provide more detail about our financial performance.

Slide 28 shows the bridging items of our revenue growth. In the quarter, volume grew 5.6%, price/mix increased by 2.5%. Foreign exchange was a 7.5% tailwind compared to 4.8% last quarter. The increase in revenue comes from the execution of our growth playbook, which includes increased consumer relevance through new flavors and formats.

Moving into Slide 29 and the year over year gross margin bridge, which shows the 188 basis points year over year improvement. This improvement is explained by 110 basis points from fixed cost absorption and supply chain efficiencies, 110 basis points from product and channel mix, 40 basis points from foreign exchange currency tailwinds, partially offset by a negative impact of inflation for 80 basis points.

Slide 30 shows the Q1 year over year improvement in our adjusted EBITDA. The $8.7 million improvement was driven by a $14 million increase in gross profit, partially offset by a $5.3 million increase in SG&A and overhead.

In SG&A, our ongoing cost savings actions in areas such as indirect procurement were more than offset by $7.2 million year over year FX headwinds as well as customer distribution costs, mostly linked to higher volumes sold. As a volume driven business, our cost structure scales with growth, and we remain focused on delivering profitable growth over time.

Slide 31 shows segment level detail. Europe and International grew net sales by 14.5% in constant currency, which is another proof that the growth playbook is working. This helped drive a $16 million increase in the segment adjusted EBITDA versus first quarter of 2025.

North America's revenue grew 3.8% in the quarter. The segment adjusted EBITDA decreased by $0.5 million to $0.7 million, driven by higher cost of goods sold, explained by an increase in freight and warehousing costs.

Greater China constant currency revenue declined by 6.4% in the quarter. The decline was explained by strong competition in the out of home channel and partially offset by growth in retail. The segment reported negative $0.8 million in adjusted EBITDA.

Despite these challenges, our team continues to work together to navigate the macroeconomic headwinds in the region while managing the ongoing strategic review.

In the quarter, corporate declined by $4.5 million, mostly as a result of FX headwinds and timing of global branding and advertising expenses. These expenses were partially offset by the ongoing efforts to increase efficiency of spend.

Turning to our cash flow on Slide 32. First, I want to remind everyone that our business plan remains fully funded, and we are focused on bringing the company to structurally positive free cash flow.

For the quarter, free cash flow was a net outflow of $11.7 million, which is $8.8 million better than last year. It is worth highlighting that the free cash flow in the quarter includes annual bonus payments, which would not occur again this year, as well as $3.5 million payments linked to the exit from our production facility in Singapore, which will finish in first quarter of 2027.

I continue to see good progress throughout the company on all levels of cash flow, and I believe we still have room for improvement. While we do not anticipate delivering positive free cash flow for the full year 2026, we do expect that the biggest drivers of our improvement will come from higher adjusted EBITDA and working capital improvements. We will continue to maintain discipline in our investment choices.

Turning to our 2026 outlook on Slide 33. As Jean-Christophe mentioned at the top of the call, we are reaffirming our outlook for 2026. We expect constant currency revenue growth in the range of 3% to 5%. Based on recent FX rates and assuming no change for the rest of the year, we estimate FX to add approximately 100 to 200 basis points to full year net sales growth.

On adjusted EBITDA, as we navigate the impact of the Middle East conflict, we now expect to deliver towards the low end of the range of $25 million to $35 million.

As we stand today, we anticipate Q2 to be lower than our first quarter with visible negative impact from the Middle East conflict, combined with a strong brand investment season. As we move through the year, we expect performance to improve meaningfully in the back half.

This is supported both by a normalization of near term volatility and by the continued rollout of our growth playbook, where investments in selling, branding and distribution, which are front half weighted, are building benefits over time.

As a reminder, this is, of course, only based on what we know today. Importantly, we do not currently view any change in the underlying health of the business. The fundamentals remain strong, and we are continuing to execute against our growth playbook while remaining agile in our ability to adapt when necessary.

Lastly, our guidance for CapEx remains unchanged, which we expect to be in the range of $20 million to $30 million for the full year.

This concludes our prepared remarks. Operator, we are now prepared to take questions.

[Operator Instructions] Our first question will come from John Baumgartner with Mizuho.

Maybe first off for MJ. I'm wondering if you can touch a bit on Europe, the EBITDA delivery there in Q1, how much of that strength was driven by maybe beneficial timing shifts from reinvestment as opposed to delivery that's more structural and more sustainable in nature from operating leverage or product mix?

Yes. So thank you for your question, John. The way to look at Q1, to be clear, and I'm sure you'll recall prior conversations where we always explain our phasing between first half and second half.

So if you look at how we invest, which was your question, we usually weight more on first half than second half. That's point number one. As we continue as well, if I go below just the branding investment, there is as well investment when it comes to the business and the way that we operate for our initiatives.

So if you have to think about the full year, Q1 is weighted more when it comes to investment, branding, selling expenses, initiatives when it comes to SG&A will go more for the year.

Did I answer your question, John?

Yes. Perfect. And then, Daniel, a follow up. The prepared comments noted that the brand communications are emphasizing taste and health. And I'm curious how you think about the health component. If plant based no longer needs to be positioned as an alternative to cow's milk because the category can stand on its own, well, that overlaps now non plant beverages trying to differentiate by including the prebiotics and fiber that's already core to oats.

So the trends seem to be coming to oats overall. It's obviously early days, but how expansive do you think these health efforts can be? Does it open additional opportunities in products like yogurt? Is it possible to leverage health organizations for product claims? Just how do you think about communicating or scaling the health benefits going forward?

Very good. So I could notice 3 questions in one, John, and I would love to take a double click on MJ's answer as well to give you comfort about how we're building EBITDA in Europe.

Listen, 3 things to unpack there. First, as far as Oatly is concerned, we don't see a shift in terms of communication focus. Taste & Health has been part of the brand's voice and vision from the very beginning, at least since the 2012 inception of the contemporary brand vision, right? That's absolutely number one.

Number two, there is no either/or when it comes to the focus on target market, right? It is true, however, as we have said for many quarters to date that there was a bit of a limitation when it comes to lactose intolerant target audience and environmentally conscious, you would say, the epitome of the alternative to cow's milk target audience.

When we look at the young generations, both Gen Z and Alpha, we see that they look at this with a much broader perspective. It's not that being an alternative to milk to cows is irrelevant. It's that they look at taste and health combined as the primary area of attraction to our appeal to consumption, right? And of course, with a double click on sustainability, if you want, or being an alternative to dairy.

And then when it comes to health, we do see momentum. We discussed with you in these discussions before. There is a significant momentum growing in both sides of the Atlantic when it comes to fibers, prebiotics, gut health, and we really, really welcome that with open arms. So there is an incrementality on that. Definitely, yes.

But there is also an incrementality when it comes to the whole combination of taste and health. Mind you, when you see the results that we have just posted, both in the U.S. and in Europe, you see the new consumers coming into the category. And that is not just taste, but it's both taste and health combined, John.

So yes to that, but the incrementality will not only come from health, but from taste and health combined.

Our next question will come from Max Gumport with BNP.

It's nice to see the continued momentum in Europe and the improved growth in North America. And along those lines, with the growth playbook clearly working and gaining traction, I was hoping to get an updated view of how you think about the long term top line growth for both your North America business and your Europe and International business.

Thank you, Max. Is that -- you have a second question, you want to double click on that one?

I will have a second. Let me start with that one.

Very good. Thank you. Just checking.

Listen, let me unpack that to you. You saw first on Europe, we do see the momentum continues to build, right? So before going into the outlook, allow me 1 minute to focus on the now. We have just posted, as you saw, 2 consecutive quarters on the mid teens, and we're clearly generating new incremental demand.

So the important thing here is that we see growth consolidating at Oatly. It's doubling the growth of oat milk and almost tripling the growth of plant based milk. And you see that is a platform that makes us look into the future with different parties.

This combined is giving us a sustained growth momentum in plant based milk of mid single digits, which is strong compared to where we were a couple of years ago.

So that sets you already for a trend. Going into the future, the first thing we look at is that very, very important data point, which the growth comes from younger generations of consumers entering the category. We now have abundant evidence that, that is the case.

So then definitely looking into the future, we look at the 70% penetration headroom we have in front of us. And that's why we believe the opportunity is enormous.

In terms of where we see the growth coming from, number one, a much stronger portfolio, which is fully focused on beverages. And in a way, I'm using this question from you to come back to something that John was asking before.

We will remain for the foreseeable future focused on drinks because it's where we have our assets, where we have our strength, where we have our superiority and where we're winning. And there's a lot of opportunity.

And the other thing to give you a lever for Europe, Max, is the new markets, what we call the expansion markets of the International markets, whether it's France or Poland or Mexico in this segment. You're talking about markets that are large, large in their potential and are building really critical mass.

So the 2 of them combined, a new portfolio and channel expansion in the established markets and the expansion in the new markets, gives you a real, real sweet spot for us to think on a second revolution for plant based drinkers in Europe.

If I now move the attention to North America in the now, I am very encouraged. We are very encouraged by how things are developing in the U.S.

First, what we see happening in coffee and foodservice. We're spending a lot of time with the teams there, and I'm very encouraged to report the progress that you see. For us, why this is important is because it's the best marker for category momentum. This channel is where habits are created.

And excluding the largest customer, this channel represents already over 25% of the segment's revenue and has been growing in double digits for some quarters now.

So when we look ahead, we only see opportunities, Max.

And finally, just to round up on the U.S., on North America, the category remains soft, but there is a very significant part in traditional retail only. And it is strengthening.

If you have checked the latest scanning data, the more Oatly gains traction, the more the category strengthens. And now we're winning, we're outperforming market and competitors with crossing the line of 30% share in oat milk for the first time.

So as the outlook for North America, I would say controlling the controllables. And at the top of the controllables, we put the category development.

Now we do put the category development. And for that, you will see 2 things. First, more visible brand investment, step by step, of course, because you know how we manage, how rigorous we are about our financial equation.

And secondly, a step change in the U.S. traditional retail adopting the kind of portfolio you see in Europe. And I have to underline, step by step, you will see some this year, but the progress will go well into 2027.

Hopefully, that gives you a full picture, Max.

Our next question comes from Tom Palmer with JPMorgan.

It's Elsa on for Tom. So you now expect EBITDA to be at the low end of the full year range, just given some cost headwinds related to the Middle East conflict. Can you walk us through how those cost headwinds have impacted results in the first quarter? And what impact do you expect to see going forward, including any levers you potentially have to offset those costs as we move throughout the year?

Thank you. It's Jean-Christophe. I'll take this one. I mean it's a very important topic, as you can imagine. So I'll take the time to unpack that.

Starting by the key statement that to date, we don't see an impact on demand because of the Middle East conflict. This is why I'm only answering on cost and EBITDA.

So quickly, if we step back, what's the context of this guidance? Remember, everything we discuss today is only with what we know today. We continue to face daily unpredictability and volatility, and we really need to mobilize our agility to react and adapt.

So now going to the heart of your question, when you look at the COGS, what do we see? On one hand, some of our COGS benefit from the fact that we have hedging on a number of energy contracts in our Europe factories.

We have a number of advanced contracts on raw materials, and we have some structural advantages, which are related to choices we have made, like we have a pellet boiler in our Landskrona factory. We have an electric truck fleet in our Europe and International freight to warehouse network. All of that is helping us.

However, on the other hand, the Middle East conflict has brought impacts into our P&L from the month of March onwards, and these costs are specifically fuel price related. The biggest one, shipping and logistics costs, both in Europe and International as well as North America. The second noticeable one is packaging costs worldwide.

So when we do the net of the advantages we have and the new costs we see from the conflict, the net of the 2 is showing a total COGS and logistics net increase, which is already visible in March P&L and that we now expect to be fully at play in quarter 2.

And honestly, too early to be much more precise than that for what could come after quarter 2, which is why when we had to review the full year outlook for this conversation, beyond the normal course of business, it means we have to evaluate both the potential full year cost impact of the conflict on one hand and our a

bility to mitigate that on the other hand.

And having done that, we now expect to deliver adjusted EBITDA towards the low end of the range of $25 million to $35 million.

Our next question will come from Samu Wilhelmsson with Nordea Markets.

A few questions from my side. I could start with North America. You mentioned that North American EBITDA was pressured by warehousing and transportation. So I was just wondering, is there a timeline or any measures in place to structurally fix the distribution economics? And do you project that it requires any additional CapEx?

Sam, would you like to add to your list? Or is that the only -- you suggest that you have more questions?

Yes, there are a few related to the cash flow. I can take them combined with.

No, I'll take that from a business operation standpoint.

I mean, listen, warehouse and transport, there are 2 ways to discuss that. There is the ongoing business as usual. We are dealing with that, and this is part of both the reports you have seen of quarter 1 and how we expect for the outlook of the market. There is -- of course, there is progress, but it has to do with the business as usual, nothing to highlight, to be honest with you.

And then, of course, we're dealing with some of the consequences of the context that JC was just describing. All of that is blended on the guidance. So there is nothing structural and to be concerned about when it comes to the actual business operation in North America to highlight in this earnings call.

And to the double click of your question, Samu, there is no specific CapEx required or considered to deal with that.

All right. Got it. Then on the free cash flow, first of all, maybe like thinking that how should we think about the Greater China strategic review's impact on free cash flow? Obviously, you can't comment on investment proceeds, but maybe from a point of view of the restructuring cash costs and from potential working capital release, is there anything relating to those that you would be willing to elaborate further?

And then on the follow up, have you tracked what kind of revenue gross margin improvement levels you would need to get to a structural free cash flow, of course, excluding the effect of Greater China from that?

Thank you, Samu. I'll start with the context of your question, which is the strategic review. And here, as you know, our answer, our messaging is exactly the same as the last quarters.

We continue to evaluate a range of options, including a potential carve out, with the very clear objective to accelerate growth and maximize value. As we work on that, we remain committed to our team, customers and suppliers.

And it's a great opportunity for us, I think, to pay tribute to our great China team, who have remained focused on the business and continue to fight every day as we execute the ongoing strategic review. So a shout out to them at this occasion.

MJ, I think you want to double click on the specifics.

Yes. The only specific, Samu, is on the allocation. We do not allocate any corporate costs to any individual segment. So just keep that in mind as well.

All right. Then perhaps last question, a follow up with previous analysts regarding the guidance. You mentioned some rationale behind the guidance and what you have done there. But what kind of uncertainties would you see around the guidance, given that if the situation continues as planned, does that support your ongoing guidance? Or what would need to happen in order you to go back to the table or revise your guidance assumptions?

Thank you, Samu.

Perhaps let me first repeat, to date, we are not seeing a demand impact from the Middle East conflict. So the question so far, with what we know today, the answer to your question is only on cost and therefore EBITDA.

And when it comes to that, I think, honestly, I cannot predict the unpredictable or be any certain on the uncertainty. I think we flagged to you, like a lot of industries, most of the cost impact is fuel, so oil leading to fuel and then fuel leading to a few categories. These are the areas we are currently and constantly looking at and monitoring. So if there is one space we need to continue to pay attention daily to see what could happen, it is that.

We'll take our last question from Andrew Lazar from Barclays.

You mentioned that so far, you've not seen any impact on demand from the Middle East conflict. Organic sales were up 8% in the first quarter, and you're still looking for 3% to 5% for the full year.

So I'm curious if there is something sort of discrete that you know of that will cause organic sales growth to decelerate from here to get into that 3% to 5% range for the full year? Or you're just being, I guess, prudent and thoughtful in case you see some impact on demand going forward?

Thank you so much, Andrew. And I think you just provided me with 2 great objectives that I will use again. But first, positioning ourselves on guidance is a balancing act. So let me unpack that for you.

On one hand, as you can imagine, our recent quarter's performance definitely gives us confidence in our sales guidance. We just posted Q1. We drove very good growth in Europe and International. We see a return to positive volume and sales growth in North America. All of that are great signs of progress.

It means our growth playbook is working, reinforcing the strategy, and therefore, we really focus ourselves on execution, controlling the controllables. That's on one hand.

On the other hand, there are 3 considerations I want you to have in mind. First, you know better than me, 1 quarter does not make the year. Second, Europe and International sales strongly picked up in the second part of last year, which means we will compare ourselves to a stronger comp base in H2.

And finally, as you said, even if to date we don't see a demand impact from the Middle East conflict, we all know how volatile and dynamic the current environment is and remains.

And therefore, as you very well highlighted in your second option, we choose to be conservative and maintain our current outlook for the moment. And we will, of course, continue to monitor the conditions closely and come back to you.

So I think you used prudent. I totally subscribe to that.

Great. And then one last quick one. You mentioned that EBITDA in Q2 likely below the level that we saw in Q1. This might be getting too prescriptive, but would -- is your expectation that EBITDA could still be positive in Q2? Or based on what you know today, we should be thinking it's potentially even a bit negative year over year?

Andrew, this is MJ. So what we said is that Q2 will be lower than Q1. And what you've just heard is that we are managing current situation with all levers that we have. I'm not going to say more than that. We are definitely confirming our guidance. So I think with those 3 topics, you can take it.

That does reach our allotted time for Q&A. I'll now turn the call back over to our presenters for any final or closing remarks.

Thank you very much.

Thank you, everyone. Thank you for joining, and have a great day. Have a good day.

Thank you very much.

Thank you. That brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, and welcome to the Oatly Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]. This event is being recorded. I would now like to turn the conference over to Brian Kearney, Vice President, Investor Relations. Please go ahead.

Good morning, and thanks for joining us today. On today's call are our Chief Executive Officer, Jean-Christophe Flatin; our Global President and Chief Operating Officer, Daniel Ordonez; and our Chief Financial Officer, Marie-Jose David.

Please review the cautionary statement regarding forward-looking statements and other disclaimers on Slide 3, which are integrated into this presentation and includes the Q&A that follows. Please refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also, on today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue and free cash flow. Please refer to today's release for a reconciliation of non-IFRS financial measures to the most comparable measures compared in accordance with IFRS.

In addition, Oatly has posted a supplemental presentation on its website for reference. I'd now like to turn the call over to Jean-Christophe.

Thank you, Brian, and good morning, everyone. I want to begin today's discussion with Slide 4 by emphasizing how grateful and proud I am of the entire Oatly team for delivering our first full year of profitable both. We have achieved a major milestone of transforming Oatly from structurally unprofitable with slowing growth to a company that is now structurally profitable with accelerating goals. So thank you from the bottom of my heart to all the Oatly employees for making this happen and for continuing to nourish and grow our brand while staying true to our mission. This is truly a significant milestone.

Moving to Slide 5, which has the key messages I want you to take away. First, for the first time since our IPO and for the first time in 7 years, we drove profitable goals for the full year with solid constant currency revenue growth and positive adjusted EBITDA. I'm also proud of how we have delivered these results. We continue to drive efficiencies throughout the organization, while simultaneously reinvesting behind our refreshed growth playbook. And we are seeing clear signs that our playbook is working and having a real impact in every market where we have fully deployed it. We are truly embedded a culture that is focused on the impact of our investments.

As we look forward, we expect to accelerate this impact as we continue to execute our growth strategy and drive incremental demand. In results, we are driving with our refreshed growth playbook proposed with the visibility we have to additional growth drivers give us the confidence to expect even stronger profitable growth than what we know in 2025. We continue to see significant potential ahead of us, and we are confident that we are taking the right steps to turn that potential into tangible results. Turning to Slide 6. Here, you can see the improvements in three of our most important KPIs. Since beginning our turnaround in 2022, we have grown revenue 19%, improved adjusted EBITDA by $275 million and improved free cash flow by $436 million.

And in 2025, we drove solid top line growth and positive adjusted EBITDA, which officially enter us into our profitable growth era. While we are turning the page from 1 chapter to the next, our story does not fundamentally change. We remain focused on driving growth and impact in a disciplined and profitable way. Part of that disciplined building will be continued focus on improving our free cash flow, which have significantly improved each year but is not yet where we want it to be. Our business plan remains fully funded and bringing the company to structurally positive free cash flow is important to us. And we fully intend to drive the business to that milestone, not just from improvement in the P&L, but from pulling on all available levers, including working capital.

Slide 7 goes one level deeper on our transformation. Here, you can see that the underlying health of our business has continued to improve as we have driven toward profitability. In 2025, we sold more volume than ever before and 18% more than in 2022. At the same time, we continue to improve our gross margin to over 32%, which is 2,100 basis points higher than 2022. And on Slide 8, you can see the results on the cultural obsession with driving efficiencies to provide fuel for growth-driving investments. Since Daniel [indiscernible] joined the company, we have reduced our cost of goods sold per liter by 23%, reflecting the significant restructuring of our supply chain, including the strategic partnership in North America that led to a consolidation of co-packers the closure of our Singapore facility and the creation of a

culture obsessed with efficiency and continuous improvement. We have also reduced our total SG&A by nearly 100 million or 21% of revenue, while continuing to invest to support our brand. We have taken a portion of these savings and redeployed them in a very disciplined and deliberate manner by ensuring that our investments are all rooted in our refreshed growth playbook that Daniel will describe.

So let me give you just some examples in the next few slides. We have invested in new on-time products that are extremely relevant to today's consumer. We have launched new flavors such as the flavored Barista products. We have launched new product varieties, such as Mace. And we have launched new products for specific customer needs such as the baristamatic that is formulated specifically for automatic coffee machines. We invested in our look books and future of taste [indiscernible], both of which actively inspire customers and consumers to think about use and consume only while also solidifying us as the Global Taste authority. We invested in events that introduce our products to new customers and consumers while also being a cultural experience that people share on their personal social media platforms. And we invested in [indiscernible] in-store executions to ensure that consumers makes us part of their daily lives. As you can see, our journey to profitable growth has not just been a cost-cutting exercise.

We have been shaping and building this business to sustainably drive profitable growth far into the future. Slide 15 shows our focus areas for 2026. As Daniel outlined, we are seeing very positive traction on our refresh growth strategy, and we will be tumbling down on its execution. We will, of course, maintain our culture of efficiency, continuous improvement and impact. This cultural obsession continuously generates fuel for growth-driving investments and the employees of investments in a very disciplined manner.

And finally, while we do not have a detailed update for you today, in 2026, we plan on completing the strategic review of the Greater China segment. We continue to evaluate a range of options, including a potential carve-out with the goal of accelerating growth and maximizing the value of the business. We will update the market on our progress as necessary. Slide 16 shows our guidance. In 2026, we expect the continued rollout of our refresh growth playbook to drive an acceleration in our profitable growth. Specifically, we expect to drive constant currency revenue growth of 3% to 5% and adjusted EBITDA of $25 million to $35 million. With that, dear Daniel, over to you.

Thank you, [ JC ], and good morning, everybody. Today, I will outline how our growth playbook is working and what to expect as we move forward. Slide 18 shows the three pillars of the playbook that we have been executing against increased relevance, attack barriers to conversion and increase availability to consumers.

Slide 19 summarizes our focus over the past 2 years. We have methodically deployed this playbook, staying true to our unique strength but radically transforming the way in which we look at the category and the way in which we deploy our brand. As part of our cultural session with efficiency, focus and impact that JC was referring to, we made the strategic choice to fully leverage our iconic brands, our outstanding core product and our unique Barista market developers team by focusing them on the areas of highest impact. So staying true to what makes oddly, this playbook change is founded on the strategic choice to be relevant to a much broader population, a decision not just to aim at growing consumption within our historical consumer base, the lactose intolerance and the environmentally conscious but also to expand our target market to the upcoming younger generations to drive true incremental consumption growth.

That means we're focusing on our strength within beverages, as opposed to trying to mimic [indiscernible] in all its phone from cheese to yogurt, ice cream and on and on, an alternative to dairy no more, but an experienced canvas for the beverages market. By simplifying our focus on beverages, we have been able to simultaneously broaden our attention from primarily coffee to the much larger and faster-growing beverage space. from coffee to matcha to cold forms to [indiscernible] and beyond. We are working with customers to renovate their menus and expand their shelves to be more relevant, more provocative and more on trend with today's consumers. As we help customers become more relevant, we are gaining more space and visibility on menus and on shelves.

To attract these consumers, we knew we had to evolve alongside them. And while sustainability will always remain the core of the Oatly mission, we know that the biggest sustainability impact we can have is through growing and converting more people. We also know that taste is a top driver for adoption. Therefore, as we say internally, we live with taste and reaching with mission. We have also adapted how we communicate Gen Z and Alpha are digitally native and we have migrated from analog heavy individual advertising to a more relevant integrated and digital-first approach.

And ultimately, the proof is in the results. It's a clear size that this strategy is working, and we have moved from slowing growth to accelerating growth, not only Oatly being the driving force of oat milk and plant-based milk in that order, what I'm particularly excited to see household penetration on the right for the first time in years. Slide 20 shows that our strategy has driven broad-based global growth in 2025. In the Europe and International segment, we saw a solid 7% growth in our established markets and fantastic 54% growth in our expansion markets. North America has also driven solid 7% growth in both retail and foodservice when excluding the largest food service customer.

Greater China has grown 5% in its key food service channel and its entry into the retail cloud channel more than doubled the retail business in the segment at the back of a more decisive [indiscernible] into [ clubs ] with the right high fiber portfolio. When we look at the underlying growth on Slide 21, we see accelerating growth, which gives us additional confidence that the strategy is working. Europe and international constant currency revenue growth accelerated throughout the year and reached 14% in the fourth quarter. Similarly, excluding a large food service customer, North America revenue growth accelerated to 10% in the fourth quarter.

On Slide 22 shows that we consistently outperformed our competition in the track channel data. During the second half of this year, we expanded our retail market share in every single European market that we measure, whether it is an established or an expansion market. Unlike in Sweden, Switzerland, Norway and Austria, we have recently became the #1 plant-based drink brand in Germany which is an amazing feat given that Oatly is a single crop competing among multi-crop brands. And in the U.S., as we start to lap last year's portfolio delis things, our drinks portfolio returned to growth in the fourth quarter at the back of sustained strong velocities and distribution gains in the core portfolio. Importantly, our growth is being fueled by new consumers entering the category.

On Slide 23, you can see that most of our major markets have increased household penetration in the past year. As we dig into the data, we see that consumers are coming into the category tend to be younger gently, which we find very encouraging. Now that we have discussed the past, I want to give you a preview of our future plans. Put simply, we are doubling down on our growth playbook. Since its initial rollout, we have found that it works in every market where it is fully executed. So we intend to continue executing on the 3 pillars: Increased relevance, attack barriers to conversion and increase availability to consumers and our upcoming innovation countries clearly demonstrate them.

Slide 25 shows how we're going to further expand of Arista lineup in 2026. Our iconic Barista product remains our top-selling item and the Flavor of Barista such as the caramel, vanilla and popcorn flavors have been a hit with consumers. In 2026, we will be launching additional flavors such as Toros and coconut. This will enable customers to create an even wider range of drinks with on-trend flavors. I am particularly excited to announce the launch of our cold Home Barista that can be added on top of any beverage hot or cold as plant-based cold form options aren't available in the market yet. This is a breakthrough product that will elevate the experience for our food service customers and with delight consumers.

We will also be capitalizing on the success of our new Matcha line up. Half of our matcha drinks have added flavors. So we're making easier and more convenient for both customers and consumers by launching Matcha products in retail with the flavors they have proven to like the most in food service. And unless you have been ignoring all social media for the past year, you will know that consumer awareness of the importance of fiber has been rapidly increasing. Consumers are fiber maxing to boost gut health increased satiety and lose weight. As a company that is rooted in science, only has historically advocated for the benefits of cyber and people's diets. In fact, many global health authorities estimate that people in the Western world have a fiber deficiency of 10 grams per day. So we will be decisively leveraging our fiber credentials by campaigning about the fiber content of our products.

But this is just the first step, and you should expect to see more from us on this topic in the future. As you can see, these new product launches are incredibly relevant to today's consumers. They directly attack barriers to conversion to on-trend flavors and convenience and we have concrete plans to increase their availability to consumers around the world. With that, I will now turn the call over to Marie-Jose. MJ, please?

Thank you, Daniel. Good morning, everyone. Slide 29 shows the quarterly and full year P&L. This quarter, we grew revenue 9.1% and 4.3% on a constant currency basis. Gross margin was 34.5%, which is an increase of 580 basis points compared to last year's Q4. Adjusted EBITDA was positive 11 million in the quarter, which is 70.4 million higher than last year's Q4. For the full year, I am proud to report that we have driven our first full year of profitable growth. We grew revenue 4.7% or 2.2% on a constant currency basis. And adjusted EBITDA was 6.8 million.

Slide 30 shows the breaking items of our revenue growth. In the quarter, volume grew 2.9% and Price/mix increased by 1.4%. Foreign exchange was a 4.8% tailwind. Slide 11 shows our year-over-year gross margin range. The benefit of absorption and supply chain efficiencies improved margin by 400 basis points. This reflects the positive impact of the closure of our Singapore manufacturing facility at December as well as volume absorption and productivity. Pricing and product mix added 200 basis points to gross margin in the quarter, mainly driven by our strategic mix management in Europe and international and customer mix in North America. We experienced a 30 basis point headwind from inflation. Finally, the impact of foreign exchange movements will withstand the response headwind.

Slide 22 show the Q4 year-over-year improvement in our adjusted EBITDA. The 17.1 million improvement was driven by 90.1 million increase in gross profit partially offset by million increase in SG&A and over. In SG&A, our ongoing cost savings actions in areas such as indirect proforma were more than offset by a 7 million headwind from FX. Slide 23 shows some level detail. In the quarter, each segment outperformed our top line expectations. Importantly, the outperformance was driven by volume, which highlights that our growth label is working and driving incremental consumer demand. European international grew volume by 13.9%, which helped drive a 9.9 million increase in the fragment adjusted EBITDA.

North America had 8.8% revenue decline was driven mainly by the change in sourcing strategy at a large customer. As Daniel mentioned, excluding this large customer, the segment grew 10% in the quarter. The segment adjusted EBITDA increased to 4.4 million, which was the second highest ever quarterly profit. [indiscernible] China constant currency revenue declined slightly. Recall that last quarter, we said that certain customers' orders shift from Q4 to Q3, which impacted the growth rates in the quarters. The same month reported 1.2 million in adjusted EBITDA.

Corporate segment improved 3.5 million, and we continue to rightsize our cost structure. Turning to our cash flow on Slide 34. For the full year, free cash flow was a net outflow of 39 billion, which is 17 million better than last year. I continue to see good progress throughout the company on all levels of cash flow and believe we still have room for improvement. As JP mentioned, our business plan remains fully funded and we are very focused on bringing the company to structurally positive free cash flow. While we do not expect to deliver positive free cash flow for the full year we do expect to improve from 2025 level.

In 2026, is the biggest driver of our free cash flow improvement are expected to come from our higher adjusted EBITDA and we working capital improvement. We will continue to [indiscernible] in our investment process. During the fourth quarter, we closed our refinancing activity that we announced in September. While there is not material impact for free cash flow. We continue to expect approximately 5 million of noncash infest expense savings that we discussed last quarter with the savings being mainly driven by a reduction in our outstanding convertible notes. Turning to our post outlook on Slide 35. We expect constant currency growth in the range of 3% to 5%. This growth includes an approximately 200 basis point headwind from a large customer in North America.

Despite this headwind, we expect the North America segment to both sell in 2026. Based on recent FX rates, I'm assuming no change for the rest of the year. we estimate FX to add approximately 100 to 200 basis points to full year net [indiscernible]. For adjusted EBITDA, we expect to be in the range of 25 million to 35 million. The year-on-year improvement is expected to mainly come from gross profit improvement, driven by sales growth, outsourced benefits as well as efficiencies in the topic. We expect to report the continued rollout of our post table with strong brand building investment. Especially in the first half of the year. Our guidance continues to assume no direct impact on our services. We also assume that the current economic conditions and consumer behavior will remain largely consistent for the year.

We expect CapEx to be in the range of 20 million to 30 million for the full year. This is higher than 2025, driven by two factors. First, some projects that were originally planned for 2025 have moved to 2-26. And second, we had on increasing capacity in our European International segment to support and enable its continued growth. We are being very disciplined with this capacity expansion and we expect it to generate a higher return on investment. Finally, on an administrative note, due to our recent entrance of Nordic bonds.

Going forward, we will start seeing an aggregated quarterly report for the fourth quarter in addition to our annual 20. This concludes our prepared remarks. Operator, we are now prepared to take questions.

[Operator Instructions]. The first question comes from John Baumgartner with Mizuho.

I'm wondering if you could speak to North America Foodservice. The expectation is there for 2026. I mean there's a partial year overhang from the large customer drag at the outset. But can you talk a little bit about the progress you're seeing in outlets aside from that customer? And how do you think about bringing the flavored varieties to the U.S. and landing new store doors within the broader growth of the coffee shop sector?

Daniel here. Good to hear you. Do you have a second question, John? Or it's only that one?

My follow-up was more on the innovation side as well.

Good, good. Good to hear you. Listen, our story is very consistent on this front on foodservice partnerships in general for the -- for the last 3 years, we have been diversifying the customer base. We added a significant amount of new customers in the channel and with visible success. As you saw the double-digit growth in the last quarter, which has been sustained for a few quarters now. These -- the segment outside this large customer now represents 30% of the total segment and with very, very good accretive mix. So these customers, which we expect to continue to grow strongly, they believe in the Oatly playbook and are committed to growing the category profitably.

So this is, as you heard us saying before, this is our controllable. And moving forward, we will decisively take them more and more of them on board. So I'm giving you more of the precise outlook there. We expect to continue to follow this growth pattern moving forward. As far as the specific customer that you referred to, it's now below 10% of this segment's revenue in the quarter. And you know John very well where we come from when JCI took over the business 3 years ago, right? So from a much, much larger number. And you heard Jay talking about what to factor in, in the model when it comes to the headwind as we move forward.

So we focus on the controllables, and that's it. From -- what we are seeing, and I know you are in tune with what's happening in Europe from an NPV standpoint, we see food service in North America is coffee and food service, I would say, because they are segments within the same space, which we internally call out of home, it's being. We see a very similar dynamic as you see when you walk into any of them like we see in Europe is being and growing very, very consistently.

So the type of signature drinks you see in Europe, and you could see the look book, you start to see them more and more in the U.S. And I would draw your attention to the latest call out. If you want to spend a few minutes in Instagram, you can go for kids of immigrants and you see the type of stuff that the brand is doing coating with a barista community and the food service community that really, really are committed to driving us forward. And therefore, there is very, very stock similarity between the signature rates you see in Europe, the signature drinks you see in foodservice in the U.S. and the kind of momentum we are driving. When it comes to specific innovations, you would have seen that we have not made a distinction between European innovation and North America's innovation.

And that's the decision following the consumers we have addressed in the last earnings call, the similarities we see in the Oatly space, in the coffee space and beverage space. And therefore, everything we're talking here from Varistamatic to confine plant-based called Foam, you will eventually see that in your home market very soon. So that's the destination, John.

Great. And then to follow up on the innovation front, it looks as though you're really enhancing the focus on fiber, which I guess, naturally ties in with your own ingredients there. But I'm curious, one of your largest competitors in the U.S. has recently launched a high-protein fortified plant-based beverage. And yes, just sort of think about the functionality of the category, how are you thinking about enhancing protein content, especially as you see more of the food service operators leading towards protein-oriented innovation.

Very good, John. And again, consistent with what we talked about, we stayed true to to who we are. Remember, when 2 years ago, we started to pick up the noise and misinformation in the category, and we really stay tuned towards science says and what we stand for in the end. And what fines says is that the Western worst population has a fiber deficit of approximately 10 grams per day. And at the same time, there is a protein surplus. So you see there is that we follow what everybody else is doing or we follow not just our instances, but who we are.

And as you saw in our prepared remarks, we didn't see a very, very significant trend, fiber maxing trends based on gut health, both in the U.S., North America and in Europe. So that's what we will have as focused doing. And note glass-full closes the gap, the fiber gap by 20% and 1 only glass of out. So what we are convinced about is that the world needs more boats and on the power port. So we're very, very excited to see fibers and gut health racing in popularity, especially with Gen Z, and we will be very active on this space, not only advocating and campaigning for it. But as you are pointing out, focusing on delivering an enhanced portfolio in this space.

The next question comes from Max Gumport with BNP Paribas.

Thanks for the question. It's great to see the continued outperformance of Oatly in the U.S. retail. But clearly, the Oatmilk category remains under pressure in U.S. retail. So I was hoping to get more color on what you believe is driving the continued milk category declines? And then also, what's embedded in your 2026 outlook for the old milk category in U.S. retail.

Thank you, Max, Daniel, again. Good to hear from you. Yes, true, if you look at the hard data at the moment, in North America, category softness and I would like to underline in traditional retail in traditional retail continues. So to add color, how do we see this mark we see strong signs that the actions we have taken are yielding visible results and not just our results but category results. The Reshape portfolio, you see what you remember where we come from. Playing in 3 or 4 different categories. Now is 95% drinks, approximately 95% drinks is yielding the results you see in the last quarter, number one.

Number two, as I replied to John before, the coffee and food service playbook is in full motion in the U.S. and is growing consistently at double digit. Thirdly, we made big steps in clubs that continue to move from strength to strength and as an extra bonus, we have opened Canada as a greenfield on top. So these are the things -- these are the measures that we have taken to drive the category forward. These actions underpin the underlying performance that you've seen in the segment, the highest sales on record in both channels with 10% underlying growth in the quarter. And going specifically into retail, you see how we are outperforming the market and competitors with the highest ever shares in both categories, post-meal and plant based in the last 4 weeks period.

So of course, all of us, you and us included, were asking ourselves a question, okay, that's good. Therefore, your strategy is one of share taking. Of course, not. We know that we believe that we know when Oatly grows, so is the category. And we start seeing the first results on penetration, Max. We're growing penetration. Again, this is something that JC and I have not seen in the U.S. since we are building the business. So this is not being fit and moving decimals of penetration is not an easy feat. So we're indeed converting consumers and the momentum is building in the U.S., too. So what's coming, two very important points. What's coming? So we turn these early results into strong category growth, which is the top of our controllables leased in the U.S.

First, in line with our selective investment choices and having reached the profitable growth milestone as a company that both JC and MJ referred to, you should expect us to progressively see this year more visible brand investments behind demand generation, as you have seen in Europe in a sustained manner. I was mentioning before the kit of in immigrant workwear for the Barista community, which is really, really breaking more records at the moment in social and within the Barista community. So that's number one, investment behind the brand investment behind the map. Second, the big missing piece here, Mark is to see in the U.S. traditional trade the kind of portfolio you can see in Europe, where we can turn all this being growth in food service and out-of-home and coffee into the retail space. And the teams were ready to deploy, by the way, all these products you see are ready to deploy and some of them are very close to be deployed.

The teams are head down on the case. But here is the point that you know very well. The U.S. market is very large and it's more complex. So the trends we observe in out-of-home or export in a couple of weeks, take time to appear on shelf. The most notable difference being the timing of shelf of retail resets typically once a year with very strong and narrow windows. So expected to get progress but only step by step. So to your point, as you can hear, we're very pleased that we see signs that we're moving in the right direction. And if I can talk for two segments about Europe as well, we will maintain the core to sustain momentum in Europe and fully turned the corner in North America. We can get these two things: investment behind the brand and demand and the retail space transformation as we move forward. That we believe will make our algorithm totally worked.

Great. And then as a follow-up on free cash flow. So it's clear you've made sizable progress again in '25 on free cash flow, and you expect continued progress in '16, although it sounds like you still expect free cash flow to be negative. You noted your plans are fully funded. I'm wondering what do those fully funded plans embed for when free cash flow turns positive?

Sure. Max, this is MJ. Look, thank you first for recognizing all the progress, and it's absolutely true, and we've been consistent repeating that our business plan is fully funded and cash is important, not only to me, but you've heard me as well saying that the culture within the company has changed significantly. So how are we looking at that moving into 2026. First, clearly, you've heard all the things we are doing in order to drive the growth. So the combination of driving the top line, continuing to be offset by driving efficiencies as well as the progress that we've been doing on working capital with strong discipline on CapEx, comment, this is a combo that give us the full confidence that this business will be free cash flow positive.

Now lastly, it's a matter of time because we know and we see the building blocks in place. So clearly, if you allow me to say that, we will continue to give you an update as we go with in 2026. But first now, we are not giving more than what we just said.

The next question comes from Kaumil Gajrawala with Jefferies.

I guess a couple of questions -- well, first of all, congratulations, it's like the win and quite the effort. A couple of things to maybe talk about the increasing household penetration, particularly in Europe, is that -- can you maybe talk about that customer? You mentioned that they're a bit younger, but is it the innovations that are bringing new customers in? Is it just general branding of the category and your brand itself? What maybe is driving the sort of -- it seems like an inflection in household penetration.

And then shifting to the U.S., I'm sure you've seen there were new dietary guidelines for -- and part of that, and I guess on social media and such is there's this big whole milk craze that's starting to take off for whatever reason. I'm curious if you know how you're thinking about that, if that has any impact on your business or maybe even the view of the category in general.

Thank you, Kaumil. Daniel. I will start here and possibly Jesse will take the second part. Listen, thank you for picking up on penetration and I know very well, you understand how complex are not easy to get penetration back to growth. By the way, I would like to underline that both in the U.S. but especially in Europe, is the only brand that is driving and growing penetration, which tells you a lot about the playbook. So the answer to your question is pretty straightforward.

It is the new growth playbook, commit. The inflection point that you called out very well, and we could have quoted a number of other markets as well, especially the new markets, which are also driving Oatly Oatmilk and plant-based category penetration in that order comes from the new playbook precisely from the new portfolio. So it is related. I prefer to talk about portfolio [indiscernible] innovation because innovation it feels like it could be random, but it's the point about making sure that consumers can have at home, the same type of signature drinks that are drinking when in coffee and food service. Be it at the matcha, be it the popcorn, all of those are driving new penetration. So -- and the numbers we have, the data points about the demographics are pretty impressive.

So it really follows the exact same words that I used in my prepared remarks. Which is Gen Z and Alpha. So really, really young consumers coming into the category as a cross-check with the new portfolio. So there is something on the pay strategy for sure. So it's mostly about that, Kaumil.

Thank you, Kaumil. JC, taking over. First of all, thank you so much for your words of recognition for the journey. I mean the loss. It has been quite a journey. So happy to hear. I'm taking your two points, cow's milk. What we see is cows milk in volume continues to decline. And it's a decline that part years ago. There is one very specific segment within cow's milk that is uptick, which is the one we to protein and reached cow's milk is the only one that is seeing an uptick. The rest is going down. So just to clarify the way we look at that.

Now when it comes to the new U.S. dietary guidelines. I look at it with mixed links to be honest. The first, on 1 hand, I'm heartened and I see very positively the normalization of non-dairy milk in the whole milk for Healthy Kings Act, meaning that no children in more schools around the U.S. will have an easier access to nutrition sustainable nondairy options on their lunch price. I think that's great. But on the other hand, when I look at the DPA heavy push for direct to include more whole cow milk, animal proteins and animal-based fats.

I find it both concerning an amidst opportunity. concerning because the leading card geologists have warned that encouraging an increase in meat and full fat while neglecting fiber goes against clinical advice ignored decade of clinical evidence and risk increasing evidence and incidence of hard disease for Americans, which already is the leading cause of death in America. And when it comes to the planet terms perspective, we know that [indiscernible] alone represent half of all climate emissions produced by our food system. So where does that bring me? I still believe that dietary guidelines are a great starting point for national public health policy and they can make an enormous difference in improving the well-being of citizens farmers on the planet. And when I look at the positive example, I took to look at Denmark, the first country in the world to create a government-led action plan to shift it towards more sustainable sources of protein and other nutrients, including fiber and healthy fats, which is for me, the best existing example out there.

the next question comes from Sam Wilhelmsen with Nordea Markets.

I could continue a bit on the free cash flow that Max highlights. What is the underlying reason that we haven't seen improvement in free cash flow during the past 2 quarters? And is the thing that's going to change in 2016 given that you are now also guiding higher CapEx in 2016 compared to '25. And you still seem confident that the free cash flow will be positive in 2016.

So your question is about the free cash flow comparison Q3 versus Q4. Is that correct?

No, it's perhaps that we haven't seen improvement from like sequentially the free cash flow when I looked. It hasn't been improved since Q2 and now you're expecting it to change in 2016, seeking for a cash flow improvement ratio that you can see that the free cash flow is going to be positive in 25 million. So what is the underlying reason why we haven't seen that yet, and we'll see it in '26.

Yes. The variance is definitely coming from -- so the short term the first, as you noted, we do have some phasing in our different components, ever CapEx, either tax, either is interest, that's point number one. Point number two, the biggest driver ads coming from how the network in is evolving between quarters. So still explaining the fact that between 2025 again in a well between Q4 and Q4. So that's one explanation.

Now going into 2026. What do we expect? We do expect EBITDA, so the free cash flow to increase and to be to continue to improve, as I just explained to map, which is really about how we are going to accelerate to our stores, how we are managing our CapEx and you've heard in the prepared remarks that we have some phasing here in regard on CapEx and how we are managing net working capital, which is our -- honestly, one d of our biggest levers that we still have to unleash and really leverage as we go through the year. So I hope I answered your question, but maybe you have a [indiscernible].

Yes. I think that's a good answer to that question. But just shortly on the CapEx also just minor detail, but given that you mentioned a capacity increase for '26 in terms of CapEx, are you ability disclose that what was the capacity utilization of your existing facilities at the end of the year?

Thank you so much. So as you can see, we -- from a toll-based standpoint, we have everything we need, and we are very confident that we can fulfill the foreseeable growth with the old based capacity we have. because of the accelerated growth in Europe and International, which is obviously a great challenge to have, we will be adding a few filling capacity, and this is what's included in our CapEx guidance.

Okay. Got it. And one last question from my side. It's regarding your equity position given that you currently have million equity in your balance sheet. Is this a risk that you are currently assessing given the near-term earnings development? And how we should think of your equity position to develop going forward?

So clearly, I think I said it already, we are always looking at our opportunities when it comes to how to manage the balance sheet and the value creation from the balance sheet. So I honestly don't have a lot to say today. But yes, we are looking at everything.

This concludes our question-and-answer session. I would like to turn the conference back over to Brian Kearney, for any closing remarks.

Great. Thank you. Thank you, everybody, for joining us today. If you have any follow-up questions, please feel free to reach out to me, and we can set something up. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Oatly's Third Quarter 2025 Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Brian Kearney. Please go ahead.

Good morning. Thanks for joining us today. On today's call are our Chief Executive Officer, Jean-Christophe Flatin; our Global President and Chief Operating Officer, Daniel Ordonez; and our Chief Financial Officer, Marie-Jose David.

Please review the cautionary statement regarding forward-looking statements and other disclaimers on Slide 3, which are integrated into this presentation and includes the Q&A that follows. Please also refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause the actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also on today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue, and free cash flow. Please refer to today's release for a reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS.

In addition, Oatly has posted a supplemental presentation on its website for reference.

I'd now like to turn the call over to Jean-Christophe.

Thank you, Brian, and good morning, everyone.

Slide 4 has the key messages I want you to take away. First, I am proud to report that for the first time since our IPO, we drove profitable growth in the quarter with solid constant currency revenue growth and positive adjusted EBITDA.

Second, we are seeing clear signs that our refreshed growth playbook is working, and we are driving positive category momentum in every market where we have fully deployed it. And finally, we are reaffirming our 2025 guidance.

Turning to Slide 5. This quarter marks an important milestone for Oatly as we achieved our first quarter of profitable growth. Achieving profitability reflects the disciplined strategic actions we have taken over the past 3 years to strengthen the foundation of our business. Since Daniel and I joined the company in mid-2022, our sales have increased by over 20% and both our COGS per liter and total SG&A each have been reduced by over 25%.

These results are the outcome of a company-wide effort to operate smarter, serve customers better, and position the company for sustained success as we execute our company's mission. A turnaround like this is not the making of just a few people. It has taken everyone throughout the company to deliver these results. And I therefore want to thank our entire team for their trust, dedication, and effort. To be clear, profitability is not our finish line. It's a marker of progress, a crucial credibility milestone, and even more important, a ramp-up for future profitable growth.

On my first earnings call as this company's CEO, I spoke to the importance of balancing performance and purpose. I believe achieving profitable growth is validation that we can achieve our dual mandate of driving both purpose and performance. We see further potential ahead, and we are confident that the steps we have taken have set us on a path for durable, scalable, and profitable growth. This quarter's performance is a proof point of what this team can accomplish, and this is only the beginning of what's possible.

Turning to Slide 6. Here, you can see the results of the deliberate and disciplined execution of our refreshed growth playbook. Put simply, our refreshed growth playbook is working. Our European and International segments started to roll out this playbook last year, and it grew revenue by over 12% in the third quarter. And the North American segment has started to see early progress, especially in the foodservice channel, which is where execution of these playbooks begins. Daniel will go deeper on the topic, but we are pleased with the progress we are seeing so far, and we are doubling down on the execution of our strategy.

On Slide 7, we are reaffirming our 2025 guidance, and we remain on track to deliver our first full year of profitable growth. We continue to expect constant currency revenue growth of approximately flat to 1%, adjusted EBITDA in the range of $5 million to $15 million and CapEx of approximately $20 million. We will continue to deploy our playbook while maintaining strong cost discipline. We believe this is a winning recipe for our company, and we believe we remain on the right path.

Finally, Slide 8, gives an update on our Greater China segment and the ongoing strategic review. Our Greater China business and our Greater China team continue to perform well, and it drove strong profitable growth in the quarter. The strategic review is ongoing, and we continue to evaluate a range of options, including a potential carve-out with the goal of accelerating growth and maximizing the value of this business. We continue to believe in the future potential of this business. As we mentioned last quarter, we continue to operate in the region, including our Ma'anshan facility, and we remain committed to our customers, our consumers, and our employees while maintaining the safety and continuity of our operations. We will update the market on our progress as is necessary and appropriate. Daniel, over to you.

Thank you, JC. Good morning, everyone.

Slide 10 shows how the Europe and International segment has performed. Revenue grew 12% in the quarter, driven by strong 8% volume growth. This growth is a direct result of the rollout of the refreshed growth playbook. As we're driving the top line, we're also expanding margins. The segment delivered another quarter of strong profitability with an EBITDA margin of 18%, which is 700 basis points higher than last year's third quarter. I am enormously thankful to this team who are really hitting its stride. As we move forward, we expect this segment to drive profit growth primarily through generating incremental consumer demand as we continue to execute against our growth playbook.

Slide 11 shows why we believe we are on the right track with our new growth strategy. Recall that the pillars of our playbook are to drive relevance, to attack barriers to conversion, and to increase availability. To do so, we're partnering with our customers to make their menus and shelves much more relevant for the taste and flavor obsessed Gen Z generation.

We start with our iconic Barista market developers to renovate foodservice menus to be ahead of the trend curve with drinks that use Oatly as a default experience canvas, not just as cow's milk substitute any longer. As these drinks generate vast awareness, consumer engagement and trial, our growth naturally shows up first in the foodservice channel with retail following. Here you can see that exact dynamic occurring in our E&I segment. Foodservice growth started to accelerate as we rolled out the playbook late last year, driving 28% year-on-year growth in quarter 3. The retail business has started to accelerate, moving from 4% growth in the last few quarters to 11% growth in quarter 3.

On Slide 12, you see this dynamic playing out in a specific market. The takeaway of this slide is that Germany is our success story and an example of how this strategy can and will drive repeatable, consistent results. We rolled out this strategy in Germany late last year with relevant messaging that directly attacks the primary barrier to conversion, taste. We then launched the Lookbook to inspire foodservice customers to renovate their menus with much more interesting and Gen Z-friendly offerings. These actions have driven foodservice growth over 45% for 5 straight quarters.

As consumers engage with our products in the foodservice channel, they naturally look for our products in retail. So that outstanding foodservice growth has led to strong growth in retail, accelerating over 14% year-on-year growth in the last 12 weeks. This strong performance has driven 70 basis points increase in our retail market share of the plant-based milk market and 280 basis points increase in the oat-milk market when compared to full year 2024.

And it's not just Germany, Slide 13 shows that we are seeing similar trends across our largest European markets like U.K. and Sweden. Retail sales growth in these markets was about 4% in the last 12 weeks and have accelerated those growth rates in the last 4 weeks. In the U.K., we have gained 70 basis points of plant-based market share since 2024. And in Sweden, we have gained 40 basis points. In a nutshell, we see that our experience and taste-driven strategy hits the bull's eye of what young and not so young generations are expecting. Oatly is creating relevance and generating category demand again.

We see this strategy working not only in the big established markets, but also in our expansion markets, where we grew nearly 50% year-on-year in quarter 3 as we continue to create the category. When Oatly enters a new market, we consistently see that it goes all oats.

We believe these markets have a long runway for growth, and we're excited to continue bringing the Oatly magic to more people in more places around the world. We are convinced that making our customer menus and shelves more relevant by sharing the future trends from around the world is no doubt the way to continue to drive excitement and create the next wave of all drinks category momentum. While each market will have its unique execution and timeline, we're confident that there is still more runway for expansion everywhere. That is why we're taking this strategy to the next stage.

Slide 15 shows the latest steps in capitalizing on the Gen Z-driven flavor bonanza that is going on across the globe. We have seen an explosion in popularity in Matcha-based drinks. And so we fast track the launch of the Oatly take on Matcha, an incredible product at the center of taste and flavor paradigm, tailor-made for Gen Z to shake, open, and pour.

We then execute our unique foodservice-led and experience-based model. As always, we are at our best when we drive culturally relevant experiences like in music festivals, engaging with content creators or meeting with customers. The engagement has been exceptional. Then to enable consumers to enjoy our products at home, we executed the third pillar of our playbook, which is to increase availability.

On Slide 16, you can see several of our in-store executions. These products, not only Matcha, but the top conversion we presented last quarter have been performing very well and are driving truly incremental volume by bringing new young consumers into the category and expanding the consumption of the existing consumer base.

Across Europe, we're seeing examples of these new products quickly becoming the fastest turning in the category and with excellent repeat rates. Importantly, these new products are accretive to our sales mix and gross margin, which is very encouraging indeed as a business model. But we're not stopping there.

Slide 17 shows what we're working on. We recently launched our first Future of Taste report, where we interviewed hundreds of baristas and drinks experts from all around the world to identify the key trends that we expect to drive menus going forward. Again, we do not just follow trends, but true to our DNA, we aim at creating them. I encourage you all to read it. But if you don't have the time, you should know that we have used those insights to inform our latest Lookbook, which we recently launched in Berlin at the global event where we invited customers, media, and opinion leaders from around the world.

Our prior Lookbook was a big success and helped us drive incremental demands with provocative drinks and unexpected recipes that totally changed the way in which consumers view oat milk. It is no longer just an alternative to cow's dairy, but an exciting canvas to experience drink in the broader and more exciting beverage space that is way bigger than only coffee.

Turn to North America on Slide 18. We continue to face the discrete headwinds that we have discussed in the past, including a large customer sourcing change and the frozen SKU rationalization. Importantly, though, we made underlying progress. Excluding the impacts of those headwinds, the segment has grown revenue by 5% in the quarter and by 4% year-to-date. We believe these growth rates are a better representation of how the underlying business is actually performing.

We have clearly reduced our dependence on our largest foodservice customer as they represented just 10% of the segment's revenue in the quarter compared to nearly 30% 3 years ago. This enhanced diversification increases our flexibility to pursue growth where it is most strategic. As we move forward, we are open to partnering and growing with any customer if they are supportive to our mission, helpful in building our brand, and committed to growing the category profitably. As we have started to roll out the playbook, we have found that many new customers checked all those boxes.

On Slide 19, you can see that our North American foodservice business, excluding the largest customer, grew up by 11% in the quarter as we are building momentum with the playbook. Our relevant messaging using the unique Oatly voice to inform consumers that they are likely to prefer Oatly to cow's dairy. These executions are in super high-traffic areas such as train stations, you see on this slide. And then when consumers are at their local coffee shop, they can now order interesting social media-ready drinks that use oat milk as the default base.

On Slide 20, you can see, we have also continued to make progress in retail, where total revenue increased by 4% in the quarter. This growth was helped by extending our relevant messaging to in-store executions. Additionally, I am excited to see the growth contribution by strong club sales, which have rapidly increased to 6% of the segment's quarter 3 revenue compared to less than 1% in 2024. We're driving strong velocities, and we expect clubs to be a growth driver for us.

Today, we're in 5 Costco regions, and we expect to add more clubs and more SKUs in the near future. While foodservice and club sales are not in the scanner data you tracked closely, these are high-quality channels that are very helpful in building our brands, growing the category, improving profitability, and ultimately delivering on our mission.

As I mentioned last quarter, we are being thoughtful, deliberate, and disciplined in rolling out our playbook in North America. Given the success in Europe and international, we know what's possible. We continue to see that the underlying category, coffee, and consumer trends are extremely similar in both regions. However, our execution is a few steps behind and we're still in the very early stages of rolling out our playbook.

The U.S. market is also more complex. And what we expect, we will continue to improve. We do not expect the growth acceleration to come as quickly as we have seen in the Europe and International markets. Make no mistake, though, we are committed to driving the performance that we expect in these critical segments. And we're confident that with sharp, locally relevant execution, our playbook can drive strong profitable growth in North America, but step-by-step.

Turning to Greater China, on Slide 21. Our Greater China team continued to execute well in a challenging consumer environment. The segment posted strong growth in both channels. The foodservice business, which is the largest part of this segment, grew revenue by 18% in the quarter, and we maintained strong relationship with the largest coffee chains.

We have continued to develop the retail channel with our entrance into club. In the quarter, the segment's retail volume reached an all-time high. And the segment drove positive adjusted EBITDA in the quarter and on a year-to-date basis. I am proud that the teams have remained focused on the business as we execute the ongoing strategic review. They have continued to build the business and service customers very well.

I will now turn the call over to Marie-Jose. MJ.

Thank you, Daniel, and good morning, everyone.

Slide 23 shows the quarterly P&L, which is our best performance as a public company. This quarter, we grew revenue 7.1% and 3.8% on a constant currency basis. Gross margin was 29.8%, which is flat compared to last year Q3. Adjusted EBITDA was a positive $3.1 million in the quarter, which is $8.2 million higher than last year Q3.

Slide 24, shows the bridging item of our revenue growth. Volume grew 6.6%, partially offset by a 2.8% decline in price mix. Foreign exchange was a 3.2% tailwind.

Slide 25, shows our year-over-year gross margin bridge. The benefits of absorption and supply chain efficiency improved margin by 60 basis points. This includes the benefits of the closure of our Singapore manufacturing facility in December. These benefits were partially offset by the impact of lower volumes in North America, including absorption headwinds and supplier penalties that were higher than anticipated as we true up our accruals.

We expect fewer supplier penalties in Q4. Pricing and product mix was neutral to gross margin in the quarter. The benefits of our strategic mix management in Europe and International and customer mix in North America were offset by unfavorable product mix in Greater China. We experienced a 90 basis point headwind from inflation in the quarter, which was mainly driven by higher labor costs in our European supply chain. Finally, the impact of foreign exchange movements added 30 basis points.

Slide 26, shows the year-over-year improvement in our adjusted EBITDA. The $8.2 million improvement was driven by a $4.3 million increase in gross profit and a $3.8 million decrease in SG&A and other. The reduction in SG&A reflects the ongoing work for a more fit-for-purpose cost structure. These reductions are from various areas, including indirect procurement that we mentioned last quarter and were partially offset by the impact of FX movements.

Slide 27, shows segment-level detail. Europe and International grew volume by 8.4%, which highlights that our growth playbook is working. This strong growth drove a $9.5 million increase in the segment adjusted EBITDA. North America's 10.1% revenue decline was driven mainly by the change in sourcing strategy at a large customer. The segment's adjusted EBITDA declined $4.5 million compared to the prior year, which was mostly driven by the decrease in revenue.

Greater China grew constant currency revenue by 28.7%, which was higher than we expected. This outsized growth was impacted by the timing of customer orders, and we do not expect sales to be as strong in the fourth quarter. Corporate improved by $3 million as we continue to drive out costs.

Turning to our cash flow, on Slide 28. In the quarter, free cash flow was a net cash outflow of $5 million, which is $22 million better than last year third quarter. As a big driver of our cash flow improvement has been working capital. Year-to-date, our total working capital as reported in the cash flow statement was a $20 million cash inflow. In the quarter, our cash conversion cycle was below 40 days, which is the best level since our IPO, driven by strong processes to manage inventory, collections, and payment terms. I continue to see good progress through the company and I believe we still have room for improvement.

Turning to Slide 29. In September, we disclosed that we signed a series of transactions to improve our capital structure and our financial foundation. The transactions were fully executed at the beginning of October. Specifically, we reduced the size of our revolving credit facility to SEK 750 million, which is a more appropriate size for our asset-light strategy. We issued SEK 1.7 billion of Nordic bonds. We prepaid our Term Loan B, and we repurchased and canceled a portion of our convertible notes. These transactions will be fully reflected in our financial statements starting next quarter.

This slide shows the impact of the transactions on certain financial items of our go-forward business. We expect to save approximately $5 million in annualized interest expense, which is a 7% reduction. These savings will hit the finance expense line in our P&L.

Finally, the repurchase of convertible notes reduced the potential dilution from the convertible notes. We benefit from both the reduction in outstanding convertible notes as well as the avoidance of any future peak interest. The potential dilution from the convertibles is approximately 40 million shares lower or approximately 10%. This equals to 2 million ADS.

On Slide 30, we are reaffirming our outlook for our main guidance metrics. We continue to expect constant currency revenue growth in the range of approximately flat to plus 1%. This full year range is slightly below our year-to-date growth of 1.4% and Q3 growth rate largely due to a shift in timing of sales in the Greater China segment. Based on recent FX rates and assuming no change for the rest of the year, we estimate FX to add approximately 250 basis points to full year net sales growth versus our prior expectations of 150 basis points.

For adjusted EBITDA, we are reaffirming the range of positive $5 million to $15 million. Given our year-to-date performance and outlook for the fourth quarter, we are likely to be in the bottom half of that range. Our guidance continued to assume no direct impact from U.S. tariffs. We also assume that the current economic conditions and consumer behavior will remain largely consistent for the rest of the year. Finally, we continue to expect CapEx to be approximately $20 million for the full year.

This concludes our prepared remarks. Operator, we are now ready to take questions.

[Operator Instructions] The first question comes from Andrew Lazar with Barclays.

I guess, first off, you were able to reaffirm your constant currency top line sales guide for the year. It looks for very modest growth. That's obviously inclusive of some of the onetime headwinds in North America and the discontinuation of some of the frozen products in the region. It's obviously still early to give any specific '26 guidance. But as we start to lap some of these onetime headwinds in North America and momentum in Europe remains strong, how are you thinking through what sales growth might look like next year? And what are the sort of the key puts and takes to consider? And then I've got a follow-up.

Andrew, it's Daniel here. I will take your question, if that's okay. As you said, it's early to talk about 2026, but this is how we're thinking about the business at the moment, and it's going in the direction you're suggesting. First, in Europe, we see solid continuity of the playbook that is clearly working. As we prepared in the prepared remarks, we see profit growth via demand generation. That's what we see in Europe, and I will unpack it for you a little bit.

In the U.S., we will continue to see step-by-step progress. That's the way we see, without the one-offs, right, that we will be lapping eventually in 2026. So how to think about Europe and how to think about profit growth via demand generation? I think it's a combination, Andrew, of a much stronger portfolio with focus on new usage drink occasions that are really allowing the taste strategy to bring more exciting recipes to foodservice customers and grow share of shelf. The growth of share of shelf in retail is very significant at the moment. To that, you should add an increase of the critical mass of the expansion markets.

So as Oatly growth returns, so does the category. That's what we are looking in Europe at the moment. And we're confident that with the new playbook, the category growth overhaul will take a little bit of time, but we're already seeing very, very concrete signals that we're in a good path.

When it comes to the U.S., as I was just saying, we see progress. If you exclude the one-off effects, we see the highest sales on records in both channels, retail and foodservice. We continue to outperform the market and also competitors in a market that continues to show softness in retail, and I underline, in retail. Why do I underline in retail? Because, of course, you need to -- you have to expect, Andrew, a bit of a one-off portfolio delisting to continue to hit us for the rest of this year and the start of 2026. Normally we should be lapping that and start with a clean base as of quarter 2. And then you will see some new distribution coming. So there is more distribution to go as of quarter 1 2026.

Second to that, you need to add clubs. Clubs is an exciting prospect. We see velocities mounting and significant expansion still to take place, as we prepare in the prepared remarks and at least 2 more Costco regions. The most interesting parts, to give you more color, Andrew, is foodservice. You see the double-digit growth quarter-on-quarter. And that is already proof that, it's initial proof that the playbook is also working in North America in the channels in which we can activate faster and more strongly. That's as far as I can share with you today, I believe, Andrew. I hope that's okay.

And then just a quick follow-up on Slide 11. It looks as though the European retail consumption for the oat milk category accelerated in the third quarter, surpassing that of plant-based milk category overall. And that had not been the case, I guess, in any of the prior 3 quarters. I guess what would you attribute the acceleration to? And would you expect the trend of oat milk taking share within plant-based to continue in Europe? Or were there any extenuating circumstances that made this quarter sort of more of a one-off?

Yes. Thank you, Andrew. Daniel again. Yes, I -- certainly, the attribution is to the experience and taste strategy. It's clearly driving consumer relevance and is creating category demand, again, in Europe. If you ask me, we -- were we expecting to see this, this fast? Possibly not. The reality is that we see concrete signs that with Oatly's growth, the category growth follows. You will remember, we use that phrase that we differentiate plant-based milks from oat milk from Oatly. That's exactly what we're seeing again. So we see strong volume growth and even oat milk penetration, Andrew, we talked these many times, penetration is a marker of category growth that is the hardest. We see some decimals of category penetration showing signs of growth.

What we see is that it clearly hits a bull's eye of what Gen Z are expecting: Flavor, excitement, well-being, and sustainability. So this new strategy puts us a bit of -- in the center of the storm in the forefront of this much bigger beverage space that we had in one of our slides in the presentation.

We're making both foodservice menus and shelves in retail more relevant and way more exciting, more colorful, more exciting. So that's why I like this phrase that we used for the prepared remarks that it's a bit of a reframing of the category, what we're seeing, Andrew, and time will tell, but it's not just an alternative to milk any longer, but an experience canvas for drinks that is relevant to all and not just for a few, right?

As we lap the first generation of plant-based growth, we are indeed creating the, what we call internally the second revolution. We are implementing the same playbook in the U.S. with positive signs in foodservice, as I said. So I'm sure you were thinking about the U.S. and so were we every day, the U.S. being a bit more complex. So it will take a bit longer to close the cycle in retail, which you know is a much more slow-moving channel. I hope that's okay, Andrew.

The next question is from Tom Palmer with J.P. Morgan.

I wanted to just first ask on kind of some of the trialing that you've mentioned this quarter and also in some recent quarters, how the taste preference is a great way to highlight or, I guess, a great differentiator and way to drive traction with customers. What are the most effective ways you found to, I guess, get customers to trial? And maybe some color on kind of how that plays out. I mean it does seem like there is some distribution opportunity, especially in the U.S. that you're starting to take advantage of. So just kind of driving the trial to bolster that.

Very good, Tom. So Daniel here again. I will try my best not to repeat, the part of the answer of Andrew were blended in your question, I guess. We believe we're really capitalizing on this taste and flavor bonanza as we like calling it internally, right? So that has transformed coffee, as you know, from hot to cold and much more of a beverage space than coffee. So how do we generate trial, which was your question?

You know that Oatly has this proprietary way of looking at business, which is we have been, since our inception, intimately woven into the coffee space. Today we've built an iconic team, Tom, of over 60 Barista market developers who spend more than 1,500 hours a week in coffee shops from Mexico City to Seoul to Paris. And they are dedicated to working directly with our partners to making their menus more relevant as they capture the evolution of coffee in -- really, really in the early stages of the change curve. So that is what we believe, and that is how we generate the trial. So people should experience these signature drinks first.

And then we scale it up. We have a very concrete monetization strategy, which is how does that show up in retail. We -- you might remember from the last quarter, we talked about the popcorn flavor, which is flying off the shelves and now we added the Matcha Oat drink. So these are drinks that have -- people have tried in foodservice, they have tried in concerts and in pop-up stores and then they find in the retail for them to take home. And that is a bit of the circle or the flywheel, if you want, as to how we see the business model working. That's what I can add, Tom, to your question.

And then just on the guidance, and you did provide, not a super wide range here in terms of EBITDA. But when thinking about kind of the upper end versus the lower end of the range, what are kind of the key swing items that you're watching?

Yes. Hello, Tom, this is Marie-Jose. So as we said, I'm going to repeat a little bit what we already said in the prepared remarks. If you look at Q3, right, from a top line standpoint, you do know that there is a timing shift here going into Q4. When it comes to gross margin, if you take back what we said in the prepared remarks, there is an impact that it's a true-up that happened in Q3 that will not happen in Q4. So we expect this impact to be for about 200 to 300 basis points in Q4.

And then if you take that from a gross margin standpoint and you add the work that we're doing in SG&A, which has been, and you can see that we have made improvement in our Q3 results as well, the combination of the 2 is what will drive a few million dollars to impact in Q4. So if you look at the evolution and the continuous improvement, what I just said explains why we just call out the low end range of our guidance.

I apologize. I meant -- I thought it was the bottom half of the range, so essentially the 5% versus the 10%.

Yes, correct. This is -- I mean, the way to look at it is it will be on the lower half because of how we are looking at Q4 when it comes from a phasing standpoint on the top line with the true-up that will not happen in gross margin in Q4. And that combined with our SG&A improvement will make the adjusted EBITDA on the lower half for the full year.

The next question is from the line of Dara Mohsenian with Morgan Stanley.

So you've done an impressive job reinvigorating growth in Europe in the last few quarters. As you mentioned, North America is taking more time. Just anything you've learned in Europe from your success there that you think is applicable to the North American market as you think about returning to consistent growth in that region? Obviously, separate consumer dynamics in the 2 regions and the U.S. is a complex market, but any cross-geography learnings you think can be applied?

And just as we look forward to 2026, can you just give us a bit more detail on plans to drive greater household penetration in the U.S., more conversion of the oat milk category, the club expansion maybe is perhaps part of that? But just as you think about really trying to unlock new customers for this category, what are the biggest focus points for you?

Dara, how are you doing? That's Daniel here again. Yes, as you can imagine, we think day in, day out about that question. So -- and we -- yes, the way which I would like to start addressing that is that we are confident, we're very confident that we will be able to drive strong and profitable growth in the U.S. We believe -- strongly believe, and I will unpack it for you. We believe it's a matter of when as opposed to a matter of if, right?

So why -- the first part of your question, why do we believe that is the case? Well, first, you see -- because we see that the evolution of the European and the American consumers in our space is fundamentally similar. I underline, in our space, right? Based on the hard evidence of the underlying consumer trends and the real-life experience of pulse check we have from our Barista market developers. You saw what I answered to Tom, we have over 60 Barista market developers in different cities in the world scanning what is -- how is the change curve happening. And the 3 points that substantiate that, Dara, are the coffee space. It has developed identically in both regions from hot to cold and into experiential beverages. You see exactly identical trends.

And you see a lot of customers now pivoting from London to New York in the foodservice space, for instance, right? So that's #1. #2, younger consumers, Gen Z, but then the Alphas are obsessed with flavor and taste. Obsessed. And #3, as we have mentioned in a couple of quarters ago, the preconceptions on taste for plant-based drinks are the #1 barrier to conversion in both regions. When we do blind taste tests in dairy versus Oatly, we see that both in the U.S. and in Europe, in many markets, the same 50% preference for Oatly everywhere. So that's the fundamental.

The second one is that we see it working already in coffee and foodservice. So remember that when we look still and when you look at these segments, you are going -- we are navigating headwinds that have to do with this large customer that I want to underline now represents only 10% of our revenue. And also some delistings of adjacencies that didn't fully work, right?

So when you remove that, we see it working in coffee and in foodservice, where customers are more receptive to the strategy I was describing, Dara, and so we can move faster. So we do believe that the taste-focused approach is the right approach for the U.S. And of course, we're adapting the nuances on taste, and we're adapting to nuances on formats. We are under no illusion that things are identical when it comes to the product offering in both markets. Now I will pause there to say what are the differences. The U.S. market is very large and more complex. The most notable difference, Dara, is the timing of shelf resets at retail. Typically does once a year and very, very strict and narrow windows.

So while these differences and complexities might make progress lower than in Europe, and it will, inevitably, we believe. The important thing is that we understand the differences, and we set the course in the right direction. So we expect progress, but step-by-step.

And then just on the profitability front, obviously, EBITDA progress this year. Just as we look beyond the guidance that's in place for this year, any thoughts around being able to drive continued cost savings, whether it be efficiencies on the supply chain front or SG&A in the broader organization as we look out to 2026 and beyond?

Thank you, Dara, Jean-Christophe speaking. Just to be clear, we will continue harvesting savings on both fronts, both supply chain and SG&A. What was initially 2 to 3 years ago, a turnaround urgent necessity has become a permanent daily mindset. So all the teams are permanently looking for opportunities to be more efficient, leaner, and drive more impact with the same amount or even less of resources. So this continuous improvement obsession is all around and will continue in '26. As you can imagine, we are still in the middle of the budget planning. So too early to translate that statement into figures, but that's exactly what we will continue to do.

The next question is from John Baumgartner with Mizuho Securities.

I'm curious, coming back to North America in terms of the profitability there, quarterly EBITDA has been bouncing around breakeven now since, I guess, early 2024. And presumably, some of the operating leverage benefits have now leveled off. I'm curious, in the context of this ongoing productivity, how are you thinking about the margin evolution in the region going forward? Short-term needs for incremental reinvestment relative to new opportunities for efficiencies, what those efficiency buckets might be? And then long-term, how do you anticipate North America margins at normalized levels relative to those in Europe?

John, I'll start by, I think MJ possibly will complement or JC here as well. There is a very, very clear and concrete part of your question, which is the volume decline in North America have consequences, of course, in the levels of absorption and some of the penalties that MJ was referring to. So that is the attribution to the -- yes, we call it lack of progress, if you want, as we would have intended in North America as we are lapping those effects eventually during quarter 1, quarter 2, as I mentioned in one of the previous questions on both foodservice and on the adjacencies, we do see underlying growth. So you see -- you should be seeing those 2 lines crossing in the future.

Now there is absolutely nothing structural or long-term that you should be concerned about. And here, we have set very clear long-term guidelines for both our margin and profitability. And we have said consistently that we believe that the U.S. should be driving strong profitable growth in the near future. It's only that the top line has been more stubborn for the reasons that we have explained so many times. There are some mechanical events that we're still lapping. Some of them are not under our full control. And we are focused relentlessly on driving consumer demands as we see already in clubs and as we see already in foodservice. So we will be relentless there. And then with volume and with demand generation, you will eventually see what we're seeing in Europe, which is profit growth through consumer demand.

And then looking at Europe, a lot of conversation about the oat milk part of the category. But I'm curious, given how well established plant-based beverages are in general in the region, what are you seeing from some of the other varieties, soy milk, hazelnut? How do you think about the competitive advantage of oat, whether it's formulation being used in creamers? I'm curious what you're seeing with interactions with other plant-based varieties. Are volumes softer? Do you see more price competition from other varieties? Can that price competition derail some of the progress that you're making in oat? Just your thoughts on the competitive environment in Europe.

Very good. There are many elements of your question. It's Daniel again here, John. First, you see it's not necessarily more established. You're talking about 30% penetration. So this category, when you look with perspective compared to all the categories were used to manage you, us, is on its infancy.

So we look at a notion of opportunity of 70% category penetration ahead of us. That's how we look at the category. And when you look at it like that, you are creating new consumer demand. You're bringing new consumers into the category and you're bringing new consumers into a category that why the new generations is not seen just as an alternative to cow's dairy. That is the most exciting, not that we have nothing -- we're not changing our mission. Our mission is still identical, and we believe in our mission. It's just that bringing more people into this category takes a different playbook. So that is the most important part of addressing your question.

Then as coffee evolves into beverages and new Gen Z and Alpha are kicking in, yes, you see some other crops evolving, but from a very, very small base. The reality is, as I said, I believe, to Andrew at the beginning, the macro dynamic we see in Europe, whether it's in the established market for Oatly, on the new is, Oatly growth outgrows the oat milk category, and then that drives plant-based milk penetration and growth. That's the phenomenon we see today.

Then the third angle to your question is pricing. You see, we command a strong premium in Europe. We have said this many times, there will always be space for pricing and private labels. That's not our market. And we respect consumers that go for price. That's not our game. We are in a value game, and we feel very, very comfortable in it. So -- and we're driving growth and profitability in it. So that is, in a nutshell, the way we see Europe at the moment.

The next question is from Samuel [indiscernible] with Nordea Markets.

Perhaps one question from my side. Looking at the financials, sequentially, we didn't see any improvement in free cash flow from Q2 despite the decrease in the cash conversion cycle. I'm just curious that how much there is still to squeeze from and what you would expect to be the magnitude for the next improvement in the coming quarters regarding the free cash flow?

Hello, Samuel, this is Marie-Jose. So look, since I joined Oatly 2 years ago, I've been repeating how cash is important to me and to the company. And this quarter, as you just mentioned, is another proof point of how much we are progressing on that field. So how to look at it? You know that we've been working through a couple of building blocks. First one, of course, is to continue our P&L profitability journey. Second is definitely to double-click on good practices and processes. And we do know that we have room for improvement when it comes to working capital. You saw the slide on the deck that as well show the improvements we're making, not only from a free cash flow, but as well on the cash conversion cycle. And then on top of that, we remain disciplined on CapEx, and you saw that as well as we go.

So I'm not going to call any numbers or any evolution. But if you take all those building blocks and you look at how we have been continuously improving, it's a matter of time. We are on track. We are delivering our business plan. We are fully funded. It's a matter of time. This is all what I can tell you.

This concludes our question-and-answer session. I would like to turn the conference back to Brian Kearney for any closing remarks.

Great. Thanks, everyone, for joining us today. If you have any follow-up questions, please feel free to reach out to me, and we can set something up. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Oatly Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brian Kearney, VP of Investor Relations. Please go ahead.

Good morning, and thanks for joining us today. On today's call are our Chief Executive Officer, Jean-Christophe Flatin; our Global President and Chief Operating Officer, Daniel Ordonez; and our Chief Financial Officer, Marie-Jose David. Before we begin, please review the cautionary statement regarding forward-looking statements another disclaimers on Slide 3, which are integrated into this presentation and includes the Q&A that follows. Please also refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Also, please note, on today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue and free cash flow. Please refer to today's earnings release for a reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, Oatly posted a supplementary presentation on its website for reference.

I'd now like to turn the call over to Jean-Christophe.

Thank you, Brian, and good morning, everyone. Slide 4 has the key messages I want you to take away. First, we continue to make good progress on our 2025 priorities. Igniting top line momentum is our most important priority out of the 3, and the actions are working. We are continuing to roll out our growth playbook more broadly, and we continue to see similar results. While we are confident our playbook will continue to drive results we are reducing our full year outlook on the top line. This reflects reduced slower-than-expected progress in our North America segment as well as a soft macro environment in our Greater China business.

Importantly, we plan to drive additional cost efficiencies and keep us on track on the bottom line and we are reaffirming our adjusted EBITDA guidance. Therefore, we are refining our 2025 guidance. We now expect Constant currency revenue growth of approximately flat to plus 1%, adjusted EBITDA in the range of $5 million to $15 million which represents no change compared to our prior outlook and CapEx of approximately $20 million.

Finally, we have decided to conduct a strategic review of our Greater China business with the goal of accelerating growth and maximizing value for this part of the business.

Slide 5 remind you of our 3 priority areas. This year, we are focused on reducing cost, igniting top line momentum and driving profitability. We fully expect our disciplined execution on these priorities these areas will set us up for long-term value creation. I will start with costs on Slide 6. We have made good progress in driving efficiencies this year. In the first half of this year, we have driven down our cost of goods per liter by 10% compared to last year's first half. And Q2 is our eighth straight quarter of year-on-year reductions. We believe we still have runway to push it lower.

We also continued to reduce our SG&A overhead expenses, which provided us with additional fuel for branding investments. and we have identified additional SG&A efficiencies that will drive more impact later this year. Overall, I'm pleased with our progress on cost discipline and we will continue to drive out inefficiencies.

Slide 7 shows the results of our deliberate and disciplined growth focus investments. As Daniel will elaborate further, our Europe and international sales performance is clear proof our refreshed growth playbook is working. When we launched our refresh playbook late last year, the category growth wasn't there. In the quarter, our business grew 4.7% while the category grew 1.9%. As you can see, the data is even stronger for the last 4 weeks where we grew over 7%. And and once again, igniting category roles and outgrowing both plant-based milks and oat milk.

Turning to our third priority, profitability on Slide 8. We continue to make good progress on profitability in the quarter. Our adjusted EBITDA improved $7 million year-on-year in the quarter to minus $3.6 million, which is in line with the guidance we provided on the last quarter's call. This continued progress and the actions we are taking to drive the business give us the confidence to reaffirm our full year profitability guidance.

Slide 9 shows our updated outlook. The biggest takeaway is that we are reaffirming our adjusted EBITDA guidance of $5 million to $15 million, which I believe demonstrates that we have good flexibility within our business to deliver on our commitments. While we are adjusting our top line outlook, to reflect both slower-than-expected progress in North America and the continued soft macro environment in Greater China, we continue to believe that our refreshed growth playbook is working, and that we are on the right path. The progress we have seen in the Europe and International segment is clear evidence of that.

Finally, we have initiated a strategic review of our Greater China business. We will consider a range of options, including a potential carve-out with the goal of accelerating the growth and maximizing the value of the business. Our Greater China business has improvement over the past few years. And it is much stronger now. It has been a strong contributor, delivered better results, established market leadership and is now well positioned for the future. We believe in the future potential of this business. Therefore, we believe now is the right time to conduct this review to help the business reach its future potential.

As we conduct this strategic review, we will continue to operate in the region, including our Manchan facility, and we remain committed to our customers, our consumers and our employees. whilst maintaining the safety and continuity of our operations. I must note, so there are no assurances that the process will result in any transaction or strategic change. We will update the market on our progress as is necessary and appropriate.

Daniel, over to you.

Thank you, JC. Good morning, everyone. Slide 12 shows how the Europe and International segment has been performing. Strong volume led double-digit revenue growth in the quarter. This steady volume-led growth, coupled with reliable operational efficiency, push the segment's EBITDA margin from the low double digits in early 2024 to the mid-teens in Q4 and Q1 and now north of 20% for quarter 2. This segment is now focused on generating incremental consumer demand. which we expect will drive continued profit improvement.

Today, I will discuss how we're driving demand and our plans for the future. Slide 13 reminds you of the 3 pillars of our growth playbook. The first is to increase our relevance to consumers. As you saw in my first slide, we have significantly expanded our portfolio from a position of strength and uniqueness out of our iconic Barito regional edition. We're doing so by leveraging new usage occasions and the emerging taste and flavor bonanza that Gen Z is driving. and that is evolving coffee into a much broader beverages space. At the same time, our advertising has become simpler, equally arresting and with messaging focused on the barriers to conversion.

The second pillar is to attack those barriers to conversion, most notably preconceptions on taste. Anywhere we test blind, we see that around 1 in 2 people prefer Oatly to cause milk in their coffee. This is a very persuasive tool that we expect to intensify in our communication. We add to these are elevated signature drinks experience, so relevant in these new beverages space.

And the final pillar is to increase the availability of our products to consumers. We continue to add new customers and new distribution points every day. We know there is still a tremendous amount of runway ahead of us, and we're relentlessly pursuing it.

Slide 14 shows the early results of executing this growth playbook. We started rolling this out in Germany and the U.K. late last year. Given the cultural relevance of our brands in food service channels, the impact of this strategy is hitting food service first, while retail following. We drove a strong growth acceleration in the German food service channel when we started our refreshed strategy. Encouragingly, these strong growth rates have been sustained for several quarters now.

Retail is a much larger portion of the German business, and we're seeing strong results there as well. We grew 5% in the last 12 weeks and a very strong 14% in the last 4 weeks. On this slide, you can see an in-store retail example of how we're maximizing our expanded Barista portfolio to gain incremental distribution and space in store. This retailer is showing our entire lineup, 1.5 liters, lighter taste, a scannable 6 pack, organic Barista and original Barista.

With this new enhanced portfolio, our distribution has grown over 35%, and we're bringing new consumers into the category. After seeing traction in the first market, we rolled out this strategy to our third largest European market, Sweden. Sweden is the company's original market, where we have been operating the longest and where penetration is the highest. Given our long history there, we thought it might be more difficult to drive improvements. But after deploying the playbook earlier this year, I'm pleased to report that we have started to see solid positive growth in our retail sales. Not only we are driving growth, but the velocities on our new Barista products are outperforming our own expectations.

These results give us confidence to say that there is still much more runway for expansion everywhere given the significant head space we have in front of us to gain more penetration and drive further category growth. And this strategy is not only working in countries where we already have a strong presence. It is also working in our expansion markets, where we grew 40% year-on-year in quarter 2 as we continue to create the category. From Madrid to Melbourne to Mexico City and everywhere in between, the teams are doing an amazing job connecting with customers and consumers, driving distribution gains and dominating the coffee and beverage culture around the world.

Today, in Paris, 2 out of 3 cafes have adopted Oatly driving a headline making category explosion. In Spain, for instance, which is already one of the third largest plant-based beverage market in Europe, our track channel data is growing over 70%, which is pushing the overall category upwards. And in Mexico City, we have taken the massive coffee space by storm and have become the fastest turning retail item in less than 2 years. We believe these markets have a long runway for growth, and we are excited to continue bringing the Oatly magic to more people in more places around the world. To be clear, though, while we are pleased with our performance in both established and expansion markets we're not satisfied. We have much bigger expectations on where our business can go. That is why we're taking this strategy to the next stage.

We're doubling down on taste with the rollout of the Oatly Look Book as shown on Slide 17. We know one of the biggest barriers to conversion is consumers preconceptions on the taste of a plant-based product. The Look Book is helping us breaking down those barriers and drive incremental demand, generating excitement with coats reminiscence to fashion and unexpected recipes that totally changed the way in which consumers view of milk, not anymore an alternative to, but an exciting compass to enjoy their beverage.

There is a taste and flavor bonanza going on in coffee shops around the world with Gen Z leading the way. And our unique Barista market developers team who are intimately woven into this space, are working hand-in-hand with our foodservice customers to revitalize their offering, a win-win that builds traffic and ticket growth with provocative, exciting and most importantly, Oatly based items on their menus. These are not your grandparents' Cappuccinos. These are premium signature drinks that tap into Gen Z's obsession with flavor and cold drinks. Can you imagine any of these drinks with cow's milk? We don't think so.

Then as this flavors gaining popularity, we are launching new products to increase their convenience. This makes the flavor profile accessible for at-home consumption while also helping us to become the vendor of choice in food service. For example, in Sweden, we have partnered with movie theaters to develop sweet and salted popcorn lattes that consumers can enjoy while there. These drinks rapidly gained in popularity. And so we launched a popcorn flavored product in no time. As we have moved from food service to retail, the velocities have outperformed our expectations. And now this item will be rolled out across Europe. These new product uses our already amazing Barista products as the chassis and then add the flavoring near the end of the production process. So our supply chain can execute this customization quickly and efficiently.

Slide 19 shows that we don't stop there. If you look at the current version of our Look Book, which is in our company website, you will see many Matcha-based drinks. And you know, there is currently an explosion of Matcha around the world. and we have decided to capitalize upon it. Here, you can see the new Matcha portfolio that we're rolling out across Europe as we speak. Not only you will be able to go to your favorite cafe to get an mostly Rosemary Matcha Latte or Smokey Matcha, but you will be able to go to your local retailer and get a carton for home use or the small cute breaks went around the go.

Turning now to North America on Slide 21, where we are still in the early stages of implementing our refreshed growth playbook. While we continue to face the discrete headwinds we mentioned last quarter, including a large customer sourcing strategy shifts and the frozen SKU rationalization that were both greater than planned, we remain confident in the underlying strength of our approach. In fact, excluding these headwinds, the rest of the North America business has grown, we achieved record quarterly retail sales and the highest ever food service revenue outside our largest customer.

Let me take this straight though. Our overall results in North America were below our own expectations. Yes, we made progress, but we had higher expectations. Given the success we've seen in Europe and internationally using the same playbook, we know what's possible, and we remain committed to applying these lessons to drive the consistent performance that we expect from our North American business. We're being even more thoughtful, more deliberate and more disciplined in executing our strategy to accelerate demand.

At the same time, we continue to solidify the operational fundamentals that will generate the muscle to increase investment, while we step up execution. Slide 21 shows how we started to roll out this playbook. We began to attack the barrier to conversion that is face, same as in Europe, we have been running these campaigns in high-impact areas to capture the opportunity in people's doormants, ultimate preference or dump as our U.S. team cost. We have also started to roll out the look book with provocative flavors to enhance menus. And over the balance of the year, we will be focused on a continued disciplined rollout of our playbook. We are confident that with proper execution and future steady investments, this strategy can drive incremental demand.

We continue to believe there is a significant opportunity to expand distribution in the U.S. in all channels, and we have exciting upcoming tests with new customers. However, we remain vigilant of the consumer environment and the category dynamics, and we do not expect an immediate inflection to growth until the full playbook has been deployed steadily and with sufficient resources for a good period of time.

Turning to the Greater China segment on Slide 22. Our Greater China team continued to execute well in a challenging consumer environment. The food service side of the business, which is the largest part of this segment, grew revenue by 12% in the first half, and we maintained strong relationship with the market's largest coffee chains. We have also continued to develop the retail channel with our entrance into club stores. In the quarter, the segment's retail volume reached an all-time high.

I will now turn the call over to Marie-Jose. MJ please.

Thank you, Daniel. Good morning, everyone. Slide 24 shows an overview of the quarterly P&L. In the quarter, we grew revenue 3% but declined 0.2% on a constant currency basis. We continue to drive strong margin expansion with Q2 gross margin, expanding 330 basis points year-over-year to 32.5%. Our adjusted EBITDA was a loss of $3.6 million in the quarter, which was approximately in line with the first quarter's level and what we guided to on last quarter's level. Both our gross margin and adjusted EBITDA are our best quarterly results as a public company.

Slide 25 shows the breaking items of our revenue growth. We grew volume by 2.8% in the quarter, which was offset by a 3% decline in price. Foreign exchange was a 3.2% tailwind.

Slide 26 shows the driver of our year-over-year gross margin expansion. The benefits of our traction and supply chain efficiency improved margin by 270 basis points. This reflects the benefit of closure of our Singapore manufacturing facility in the [indiscernible] as well as volume absorption, productivity efficiencies and improved sourcing. Pricing and product mix added 110 basis points to our gross margin in the quarter. While our revenue bridge that I discussed on the prior slide showed a headwind from price mix, we drove margin mix benefit in the quarter as we reduced sales in lower margin products and customers an increase sales in higher margin ones.

For example, some of the newer products in large part sizes are dilutive to price/mix in the first bridge, but are margin accretive. We experienced a 90 basis point headwind from inflation in the quarter, which was mainly driven by higher labor costs in our European supply chain and certain inputs in North America. Finally, the impact of foreign exchange movements added 40 basis points to gross margin.

Slide 27 shows the year-over-year improvement in our adjusted EBITDA. The $7.4 million improvement compared to last year's second quarter was mainly driven by an $8.6 million increase in gross profit. The $1.2 million increase in SG&A and over mainly reflect foreign exchange movements, which were a $3.5 million headwind in the quarter. Excluding those FX headwinds, SG&A would have decreased as we continue to reduce our overhead expenses.

Slide 28 shows segment level detail. Europe and international improved volume by 9.4%, which highlights that our growth playbook is working. The second quarter was the segment all-time highest volume quarter. North America, 6.8% decline in revenue was driven mainly by the change in sourcing strategy and the segment's largest customer. The same month, adjusted EBITDA declined $3.5 million compared to the prior year, which was almost entirely driven by an increase in branding and advertising. Greater China saw a 6.6% constant currency revenue decline, which mainly reflects the difficult macro environment impact on the consumer.

Turning to our balance sheet and cash flow on Slide 29. Our business plan remains fully funded. As of the end of the quarter, we had $68 million of cash and $221 million of credit facilities. The middle of the slide shows our free cash flow improvement. The Q2 cash outflow of $5 million was our best quarterly performance as a public company and confirms our progress in developing a cash culture mindset in the company. In the quarter, our total trade working capital balance was the lowest since 2021 when our business was much smaller. And our quarterly cash conversion cycle was the best since our IPO driven by strong processes to manage inventory, collections and payment terms. I am seeing good progress throughout the company, and we continue to believe there is still room to improve.

Slide 30 shows our redefined outlook, which continues to include the Greater China segment. We now expect [indiscernible] currency revenue growth in the range of approximately flat to plus 1%. We have reduced our outlook to reflect lower-than-expected progress in North America execution as well as softer macroeconomic conditions in the Greater China region. In addition, our prior outlook assumed by foreign exchange would be a 100 basis point headwind to asset. Based on recent FX rates and assuming the word for the balance of the year, we now estimate FX to be an approximately 150 basis point tailwind to full year net sales.

For adjusted EBITDA, we are real term in the range of positive $5 million to $15 million. We continue to expect gross profit dollars to improve in the second half compared to the first half. benefiting from best-in-class supply chain processes combined with higher sales. We have also identified additional SG&A savings. We plan to drive these savings by accelerating our work of eliminating inefficient spend in areas such as indirect procurement, which we expect primarily hit the corporate segment with the impact starting to hit in Q3 and then bring in Q4. While some of these savings are onetime in nature, such as incentive pay, we expect a large portion to benefit us beyond this year.

Our guidance assumes no direct impact from tariffs since we expect the product that we import to the U.S. to be advanced to the U.S. We also assume that the current economic conditions and consumer behavior will remain largely consistent for the rest of the year. Finally, we now expect CapEx to be approximately $20 million for the full year. We have continued to drive efficiencies in our supply chain, and we believe this is a number related levels of investments where we are continuing to invest in our business while being disciplined in our capital. This concludes our prepared remarks.

Operator, we are now prepared to take questions.

[Operator Instructions] The first question today comes from Kaumil Gajrawala with Jefferies.

I guess a couple of things on the decision on the strategic review of China. The first maybe is why is now the right time, but maybe more importantly, what is an optimal outcome look like? And to give you maybe make it a multiple choice question is, is the preference to sell, is the preference to raise some capital through a JV, is the preference to find a strategic that helps improve the condition of the business? If you can maybe just help us out with where you hope to get to with this review?

Kaumil, this is Jean-Christophe. Thank you so much for the [indiscernible] question on the same topic. So let me categorize them one by one. First, why. We're doing that is because we believe in the future potential of this business, and we are looking to maximize shareholder value. Your second question was, why now? And why now is the after the reset that we conducted in this business in '23 and '24, we believe this business is now leaner and stronger. And therefore, it's a good time to step back and evaluate how to accelerate its goals and maximize its value. The next thing I want to tackle is your question about what are we looking for? As we said, we are considering a range of options, including a potential carve-out. Of course, we are not going to speculate today on the ultimate outcome of this strategic review. and we will provide updates on the strategic process as appropriate and when relevant. The final thing I want to insist on is that as we conduct this review, we remain fully committed to our team, to our customers and suppliers in Greater China.

Okay. Great. Got it. So looking forward to hearing about progress. On North America, I think it's -- the business was flat, excluding business losses discontinuations. But still sounds like a challenged market to some degree. So why do you think that is? And what do you think you can do to turn that around? Again, excluding any of the sort of discontinuations or business losses?

Thank you, Kaumil. Daniel here. Good to speak to you again. it's important to accentuate what you said, right? So when we exclude these 2 one-offs that we are going through this year. and that we expect to affect us for the year to go on a full year basis. We see a solid performance in a challenged market, as you say, the market continues to show softness, Kaumil. But as we discussed, it's plateauing. The underperformance of the market is plateauing and slightly inflecting that curve, right? So for the future, while in the short-term performance is below our expectations and our expectations, as we discussed before, is for the North American segment to be our largest and fastest growing. The opportunity remains intact for 2 reasons.

On one hand, the mechanical growth, be it distribution, be it category growth and be it operational excellence, it's still to be deployed, if I'm brutally honest. On the second hand, we have every confidence that the early signs of significant improvement we're seeing in Europe can be fully deployed in North America. If you want, I can elaborate why, but the consumer and the demand situation in Europe compared to North America is similar. Beyond the most veg and climate-focused consumers, the barrier beyond those taste continues to be the #1 barrier to consumption, North America and Europe are identical.

Whether we taste in Germany or the U.K. or in the U.S., 1 out of 2 Americans preferred Oatly to cow's milk in their coffee. The brand is equally strong and equally hops in both markets and also the way coffee is developing in Europe and in North America is identical. It's going from the [indiscernible] cappucino mostly in winter to a raft of choices and signature drinks mostly cold. So all of that combined proves that when we are able to execute the playbook and invest accordingly in full, Kaumil, the same dynamics will progress.

The next question comes from John Baumgartner with Mizuho.

Maybe first off, Daniel, if I can come back to North America and just keep on this topic, I think just given the magnitude and duration of the volume declines at this point for the category, we're 4, 5 years into this, it seems like it's become less of an issue of maybe reduced frequency by existing households and more just folks leaving the category. And I appreciate the growth playbook and flavor innovation, but to the extent -- I mean, I guess, to what extent is this weakness just simply the protein content in the U.S. relative to traditional dairy, whether it's protein and trend, GLP1s, whatever it may be, which might limit the ability or ease of duplicating some of the turnarounds that you've highlighted in Europe?

That's a very provocative question. You made the point as you have done in the past about frequency and penetration, John, and I totally get it. If we go through some facts, the reality of the penetration numbers is not necessarily showing that. Penetration for oatmilk in the U.S., it's stable. And in the case of Oatly has shown consistent decimals of growth in our yearly and monthly penetration. So there is a relevance and there is a frequency topic that we are addressing and point taken about protein, the reality, as we have discussed in previous calls and one-on-one, the protein topic is more of a value phenomenon in North America, less than a volume phenomenon when you look at the dairy category.

We will be hand-in-hand focused on driving relevance. We don't make a choice between health, protein, fibers and we strongly believe that we are focused on driving both penetration and frequency in that order -- penetration and frequency in that order, taste remains the #1 barrier to consumption for plant-based products. and certainly for oat milk and plant-based milk. So you will see us without ignoring the point of our protein, a lot of focus on the health topic via enhanced fiber content wholeheartedly driving the taste strategy, which is proven -- is starting to prove to work in Europe, John.

Okay. And then a follow-up on the P&L. You identified these incremental SG&A savings for this year and moving forward as well. Can you detail a bit more where these savings are derived? I think you mentioned some procurement, but I mean, I guess, what prompted these reductions right now? Can you isolate the savings between corporate expenses relative to the individual segments. And then I guess, to what extent should investors feel confident that you're not cutting too close where it begins to sacrifice resources for growth?

John, this is Marie-Jose. I expected this question to be honest. So first, as you know, over the past 2 years, we've gone through 2 big savings programs, which allow us to look at all the details and understanding in a very deep detail our cost structure. So what does it mean? It means that this approach led us to be in a place where either we want to be aggressive at all costs, which is absolutely not the way that we are looking at it. We are looking at it with the approach where we want to be aggressive, but with the right level of efficiencies and refueling as well the top line. So the way that I want you to think about it is, it's about efficiency without hurting the business. and it's about what we had identified as additional SG&A savings. With that said, let me double click those additional SG&A ceding.

Mostly, we come from corporate. Just answer to your question. Yes, it's a part of the indirect savings, which we will come from initiatives, right? I mean, I'm not going to tell you all the initiatives that it could be just like centralizing some contracts, it could be like professionalize our way of negotiating. So that's one thing. The other things are coming from the efficiencies that we have been looking at analyzing and making sure that they will come through as we go into the year. So clearly, corporate segment aggressive as we can without working the business on both sides, efficiencies and incremental from indirect. Hope this answers.

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks. .

Great. Thank you, everyone. If you have any follow-up questions, feel free to reach out to me in Investor Relations. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.